Bitcoin’s Recovery and the Emerging CME Gap
Bitcoin (BTC) showcased a remarkable recovery over the weekend after experiencing a sharp drop, hitting a low of $78,258 on February 28. Despite this bounce-back, the leading cryptocurrency has now formed a substantial new gap on the Chicago Mercantile Exchange (CME), sparking concerns of a potential retreat to the lower $80,000 levels.
Bitcoin’s Path Remains Uncertain
According to insights shared by crypto analyst Rekt Capital on X, Bitcoin managed to close two significant CME gaps over the weekend. The first gap spanned from $78,000 to $80,700, while the second ranged from $92,800 to $94,000. These gaps highlight the intense volatility that Bitcoin experienced during this period.
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Following this turbulent price movement, Bitcoin has now established a new, significant CME gap between $84,650 and $93,300. Rekt Capital noted that although the recent low might have been at $78,258, it doesn’t guarantee that Bitcoin won’t revisit this price level.
For those unfamiliar, a Bitcoin CME gap arises from the discrepancy between Bitcoin’s closing price on the CME futures market and its opening price the following day. This gap is created because the CME halts trading over the weekend, while the spot market continues. Historical patterns suggest that these gaps often act as price magnets.
Despite the potential for BTC to dip to the lower end of this new CME gap at $84,650, it would still represent a higher low compared to Friday’s low of $78,258. Rekt Capital emphasized that as long as Bitcoin maintains its macro support at $93,500, any short-term volatility presents potential opportunities.
Crypto trader Merlijn The Trader also commented on the situation, indicating that “volatility is about to go parabolic” in light of the new CME gap. According to Coinglass data, the heightened volatility has already resulted in liquidations exceeding $900 million over the past 24 hours.
Another analyst, Will, observed that the overall sentiment surrounding Bitcoin is excessively optimistic, suggesting a retest of a previous accumulation range might occur. Will is targeting the mid $70,000 range for potential Bitcoin accumulation.
Potential Downside Risks for Bitcoin
While Bitcoin currently hovers near the $90,000 mark, some analysts predict that the leading cryptocurrency by market capitalization could fall to around $74,700. Crypto analyst Ali Martinez pointed out that historically, Bitcoin tends to rebound from long-term support levels, which are currently in the mid $70,000 range.
Additionally, Coinbase analysts have noted that Bitcoin’s price struggles due to the lack of significant near-term positive catalysts. The recent Bybit security breach and increased macroeconomic uncertainties are likely contributing to Bitcoin’s challenges.
On a brighter note, spot Bitcoin exchange-traded funds (ETFs) are witnessing renewed net inflows. At the time of writing, Bitcoin is trading at $90,170, a decrease of 1.5% over the past 24 hours.
BTC trades at $90,170 on the daily chart | Source: BTCUSDT on TradingView.com
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