The markets are a sea of red. Ether (ETH) has dropped from $500 to $300 in a few days, people are screaming in panic that the DeFi bubble has already burst, lamenting the collapse of their „currency with a name linked to food“, after an account active on Twitter for just a month has stolen 38,000 ETHs from investors.
Yes, it’s just another week in the crypto business, but no one noticed that Tron (TRX) seemed to be doing great in the middle of it all?
It could be a coincidence, but the last time it happened so quickly the entire crypto market entered the long, cold crypto winter.
Bitcoin has lost 21% of its value in dollars, after falling from $12,500 to below the important $10,000 in just two weeks, tracing before our eyes the now famous „Bart“ pattern.
But when the leading cryptocurrency market capitalization crypto evaluator makes such a strong movement, it generally takes all the other crypto assets with it.
The high of this chapter in Bitcoin history has hit about $12,500, and many are now wondering where it could find its low. In this week’s analysis, I will examine three potential action plans to identify the minimum.
The CME Gap
Most experienced traders are familiar with the CME gap, but I will explain it anyway to those who have not yet come across this witchcraft. Bitcoin is a 24/7 tradable asset. However, the CME is only open 23 hours a day, opening on Sunday evening at 17:00 CT and closing at 16:00 CT on Friday afternoon.
This means that there are time windows where gaps can form, usually over the weekend, between closing on Friday and reopening on Sunday evening. Despite this, traders can still trade the asset 24/7 using what the CME indicates on its website as:
„Rule 526: EFRPs (Exchange for Related Position), according to Rule 538, can be traded/executed 24/7 and must be submitted for clearing during the appropriate section.
Therefore, as far as charts are concerned, orders can still be placed when the market is closed. This means that orders can remain empty, thus creating the famous gap.
The most recent one took place on August 13, a Thursday. The CME closed for one hour when Bitcoin was at $11,715, and when it reopened the price had risen to $11,765. This $50 movement is what created the gap. So, when Bitcoin reached $12,635 on the CME chart, it is possible that some orders from $11,715 were left unfinished.
On August 19, 2020, when the price fell below the zone, the gap was considered „filled“, so it seems reasonable to assume that the orders left behind at this level were filled.
However, the Bitcoin price continued to lose Crypto Genius ground, hitting a new local low at $9,905 on the CME chart, currently only $240 away from a gap formed on July 24.
Here things get confusing. The range of the July 24th gap is between $9,665 and $9,925, so one would wonder if the gap has yet to be filled, or if it has been partially filled.
When the price entered the range, it did not reach $9,665, so it has not completely filled the gap. Does this mean that there are still orders waiting to be filled at $9,665?
We cannot know, and the result is the division between those who believe that the gap has been filled and those who are convinced that it has not.