Quick Facts
Bitcoin Price Forms Two BTC Futures Gaps as Coinbase Premium Flips Negative: What’s Next for the Crypto Market?
The crypto market has been experiencing a rollercoaster ride in recent days, with Bitcoin’s price volatility leaving traders and investors alike wondering what’s next for the cryptocurrency. In this article, we’ll explore the current market trends, analyze the technicals, and provide insights on the potential future direction of Bitcoin’s price.
Coinbase Premium Index Turns Negative
The Coinbase premium index, which measures the gap between BTC price at Coinbase Pro and Binance exchange, has turned negative after a 15-day positive stint. This indicates potential bearish sentiment among US investors, who are viewed as a key driver of institutional and retail demand. The premium’s decline suggests reduced buying pressure on Coinbase, which is a concern for market participants.
BTC Futures Gaps: A Magnets for Price Action
Bitcoin is currently trading at a pivotal juncture, with the price hovering between two CME futures gaps. The gaps are between $92,000 and $92,500 from two weeks ago and $96,400 and $97,400 from the recent weekend. As highlighted in our previous articles, CME gaps often act as magnets for price action, with historical trends showing a tendency to fill these gaps in a matter of days. These gaps can create opportunities for traders and investors to take long or short positions, depending on their market outlook.
Market Sentiment: A Mixed Bag
The current market sentiment is a mixed bag, with both bullish and bearish signals presenting themselves. On the one hand, the Coinbase premium index turning negative and the selling pressure over the weekend suggest a potential top is forming. On the other hand, the aggregated futures bid-ask delta is turning positive, suggesting potential buying interest in derivatives markets.
Open Interest and Liquidity: What’s Next?
Approximately 8,000 BTC in open interest (OI) was removed across futures markets, reflecting reduced leverage. However, the aggregated spot cumulative volume delta (CVD) is still showing significant sell-side activity, indicating sustained selling pressure. This could lead to a short-term price decline, but the CME gaps could provide a cushion to absorb some of the selling pressure.
Technical Analysis: A Trend Reversal?
The daily chart is showing a trend reversal signal, with Bitcoin’s price failing to hold its position above its 200-day simple moving average (blue line). This could indicate a shift in trend, with potential support levels at $93,000 and $92,000. However, the 200-day SMA is a key level, and a clear break below it could trigger a more significant decline.
Key Levels to Watch
Several key levels are expected to be tested in the coming days, including overhead resistance at $97,000-$98,000 (CME gap 1) and key support at $93,000. Additionally, the price is likely to test at least one gap this week, with a potential drop to $92,000 more likely after failing to hold its position above the 200-day SMA.
What’s Next for Bitcoin?
As we navigate the current market conditions, it’s essential to prioritize risk management and stay informed about market developments. In the short term, the price is likely to experience choppy action, with overhead resistance at $97,000-$98,000 and key support at $93,000 presenting themselves as potential levels to watch. Whether Bitcoin’s price will test at least one gap this week or experience a more significant decline remains uncertain, but the CME gaps will continue to play a crucial role in shaping the market’s direction.
