Bitcoin futures trading has been a big disappointment so far this year, with large providers like CME and CBOE only able to trade a tiny portion of the underlying cryptocurrency. As a result, Bitcoin futures prices have been unable to fulfill their promise of providing an accurate gauge of the underlying asset.
The bitcoin price has dropped to fill the gap left by the expiration of CME’s bitcoin futures contract, after investors’ attention turned to the potential for a short squeeze.
Bitcoin’s price has dropped significantly over the past week, falling from above $10,000/BTC to around $6,000/BTC. The reason for the drop is due to a spike in trading in the CBOE Bitcoin futures on the 16th December, which resulted in a huge price gap between the CME and CBOE Bitcoin futures. Since then, the CME futures have been trading at a premium to the CBOE futures. Since Bitcoin futures are worth less than the underlying asset, the Bitcoin price will often drop as the futures contract expires.
Bitcoin (BTC) was launched on the 5th. July was trading around the critical support of $33,000 after the weekend rally faded within hours.
1-hour candlestick chart of BTC/USD (Bitstamp). Source: TradingView
Bitcoin futures mark new price targets
Data from Cointelegraph Markets Pro and TradingView showed that the BTC/USD exchange rate broke from its bullish momentum at $35,900, falling just over 5% on the day.
A reversal leaves bitcoin within a defined trading range, with traders paying attention to the various hurdles that must be overcome before a continuation occurs.
For Michael van de Poppe, these obstacles come in the form of bitcoin futures breaks.
CME futures closed Friday at about $33,285, down $2,700 from Sunday’s local high.
As a result, spot prices tend to fall to bridge the gap between the end of one trading week and the start of the next.
That’s exactly what happened – BTC/USD rose to around $33,300 and is hovering around $33,600 at the time of writing.
I expect a corrective move to $33,400, closing the CME gap, after which we can move on, Van de Poppe said prior to the event.
He added that a higher CME gap at $46,500 could also serve as a bullish target if the market starts moving higher.
If we have a rally, I wouldn’t be surprised if we have a rally to that WEC gap as a whole, he noted.
CME bitcoin futures 1-day candlestick chart with gaps. Source: TradingView
Altcoins resist surrender
Meanwhile, the past seven days have been generally favorable for altcoins, with many tokens up compared to the same period last week, while bitcoin remains lower.
Related: Top 5 crypto-currencies to keep an eye on this week: BTC, ETH, UNI, ICP, AAVE
Ether (ETH), the largest altcoin by market capitalization, fell on Monday but is up 11% this week and trades at $2,213.
According to Cointelegraph, the price of Ether is also showing strength against Bitcoin, with ETH/BTC targeting the popular high in the range of 0.075.
However, only two of the top 50 cryptocurrencies by market capitalization posted positive price movements on the day, as bitcoin’s sudden reversal took its toll.
A slight decline in bitcoin dominance gives alts a potential advantage, as they tend to perform best during periods of average bitcoin activity after significant declines.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and every transaction involves risk. So you need to do your own research before making a decision.If bitcoin prices could hit $46.5K before next month, it would be the first time the price topped that level since late November, when the mega-cap cryptocurrency hit a high of $18,711.40 on CoinDesk’s Bitcoin Price Index. This target is based on Bitcoin’s spot price at $46,500, which is based on the cryptocurrency’s spot price at $4,600.00, according to Bloomberg.. Read more about why is btc dropping today and let us know what you think.
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