Bitcoin Price Drops Below $60,000: Key Reason Explained

The NFT Unicorn GRjT5brXYAAAAtG Bitcoin Price Drops Below $60,000: Key Reason Explained Crypto News

The Bitcoin price has fallen to a low of $59,604 today, marking a 4% decrease. According to several renowned crypto analysts, this movement was largely driven by the phenomenon known as the CME gap, a concept critical in Bitcoin futures trading at the Chicago Mercantile Exchange (CME).

Why Is Bitcoin Down Today?

A “CME gap” is a term used to describe the price gap that emerges on the Bitcoin CME futures chart. Unlike Bitcoin’s spot markets that operate 24/7, the CME Bitcoin futures market only trades five days a week, closing over the weekend and on holidays. This difference in trading hours can result in a price discrepancy between the last traded price on Friday and the market’s opening on Monday.

Today’s Bitcoin price action can probably be directly linked to the closure of such a gap. Over the weekend, a noticeable gap formed. Daan Crypto Trades (@DaanCrypto), a prominent trader and analyst, confirmed this via X, explaining, “Bitcoin closed most of the gap that was created during this weekend. On Monday it also closed the gap that was created a week ago and topped out right at that point. [..] The gap has now been fully closed. No major gaps in nearby proximity as we speak.”

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Other market participants echoed this sentiment. Titan of Crypto (@Washigorira) indicated the bullish potential post-gap closure, stating on X, “Bitcoin CME Futures GAP got filled! As expected. Nothing holds BTC back now. Time to send.” This view suggests that filling the gap could remove resistance for Bitcoin’s price, potentially leading to an uptick.

Crypto analyst Ninja (@Ninjascalp) confirmed, “this was just a CME gap fill guys […] it’s bullish selling. It’s all going to be okey. Don’t panic.” Another analyst commented “For anyone questioning who’s running the BTC market in the short term, it’s market makers! There was no way they were going to leave a $1,650 CME gap from the weekend.”

What To Expect Now?

Marco Johanning offered a more nuanced take, emphasizing the precarious nature of the current price level. His commentary via X highlighted both potential and risk.

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“Main scenario: Bitcoin has lost the trendline and closed the CME gap. The price is sitting on a local support, from which it can now pump. That would be a typical mid-week reversal with the liquidity behind the equal highs at 63.8k as the main target. However, the current level is also fragile. If the support is lost, we could see another 1k-2k drop. I can hardly wait for Bitcoin to finally leave this exhausting time capitulation range,” Johanning stated.

The analysts from Alpha dōjō (@alphadojo_net) provided an in-depth analysis, dissecting the day’s price movement and potential future trends. Their report highlighted the critical levels that traders are watching: “The analysis is quite simple: BTC needs to bounce here, or if it loses the $60k level, much lower prices are likely. As long as we don’t break below $60k or above $63.5k, it’s best to take it slow and wait for a clearer direction.”

They also noted a significant liquidity pool around the $60,000 mark which might act as a support, while pointing out that a strong selling presence above this level at $64,000 could cap upward movements. “In the order books, the sell side remains very strong, while the bid side fails to show any increase.”

At press time, BTC traded at $60,388.

The NFT Unicorn BTCUSD_2024-07-03_13-25-00 Bitcoin Price Drops Below $60,000: Key Reason Explained Crypto News

Featured image created with DALL·E, chart from TradingView.com

Source: NEWSBTC