As Bitcoin continues to follow its descending channel, here’s a look at where the price may go over the next month
Bitcoin dipped below $6,000 over the weekend, leading to speculation that the coin could see lows down to the $4,000 level.
The price has now climbed back and is currently displaying sideways price-action at around $6,200, leading to speculation on where the first cryptocurrency is heading next.
The first level for support held and we've pushed upwards.
There's also the CME Gap, probably the reason why we're moving, so that could be closed first.
This means that a $6,050 flip could trigger another push to $6,400-$6,500, before further down.
Still bear pic.twitter.com/bn0BHHRDHd
— Crypto Michaël (@CryptoMichNL) March 30, 2020
Mind the gap
Some traders have cited the CME gap (Chicago Mercantile Exchange) that Bitcoin is yet to fill.
While most of the Bitcoin exchanges run 24/7, the CME is a well-established trading exchange that handles a range of futures and options – meaning that the exchange has set trading hours.
While the trading floor is closed, Bitcoin’s price can rally or dump, leading to a divergence between the CME’s last traded price and the price it goes on to trade at. This gap has a high probability of filling once established, leading to some traders observing the gap and using it as an indicator for where Bitcoin’s price is heading next.
The CME’s monthly close on Friday 27th March was $6,680, meaning that Bitcoin has a $600 gap to fill. However, it is yet to be seen if the price of Bitcoin will go up to fill the gap, or if the CME will come down to create more bearish pressure.
Bitcoin has filled around 95% of CME gaps in the past, making it a very useful and reliable indication of price movement. However, the recent drop in Bitcoin’s price following the coronavirus outbreak has meant that there is still a previous gap yet to be filled.
On 9th March, three days before the dramatic drop in price, a gap of $930 was created. As this gap has yet to be filled and now another has been created, it will be very interesting to see which the way Bitcoin’s price decides to go.
In bullish news
The CME gap paints a bearish trend in the short-term– but about further ahead throughout April?
There is some speculation that since Bitcoin’s crash in March, a new ascending channel is forming to the upside, with $7,200 being the next price landmark for the cryptocurrency, making $8,300 the new level of resistance.
There is also the argument that the stimulus package that the US economy enjoyed last week saw global markets rally somewhat, whereas Bitcoin managed to recover 80% without any injection of liquidity – something that Bitcoin enthusiasts have been eagerly citing as a sign of strength for cryptocurrency projects going forward.
In addition, there are significant strains on the global economy, which include high levels of debt and interest rates that are already at their lowest point – meaning they cannot be lowered again to try and stimulate borrowing and growth.
However, the combination of the increased mining difficulty expected post halving in May, and no end in sight for social distancing, April 2020 could be a defining moment in Bitcoin’s price.