Bitcoin CME Futures Gap Or Yet Another Bear Trap?

Bitcoin (BTC) has yet to close a gap on CME Futures. The 4H chart for BTC/USD shows that gap and traders are now divided on whether this gap will be filled now or after another move to the upside. The recent pump in Bitcoin (BTC) that left this big gap was a classic case of institutional exit. The big players are cashing out while they keep retail bulls thinking the market is ready to rally towards a new yearly high. The recent bearishness in the market was reversed with a few bullish moves and we are practically back where the price was before the weekend. The fact that everyone is now looking at this gap and it is all over the news should be concerning for retail bears because it means that further manipulation is possible. 

We have seen such gaps closed in the past but they rarely happen when everyone is expecting it. The larger descending triangle on the 4H chart for BTC/USD could still be invalidated further and the price could rally towards $10,000 and higher to inflict further pain on the bears. Historically, we have seen such big moves to the upside just before the beginning of a major downtrend. It has the two pronged objective of stopping out the bears to discourage them from shorting the market and trapping in the bulls just before the beginning of a major downtrend. In addition to that, if the price is pumped just like it was before when it shot up 43% in two days, it gives institutions the opportunity to get out of their positions at favorable prices. We are close to the beginning of a major downtrend but things could get volatile short term because no fair play is to be expected when the stakes are this high.

The big players are now in a rush to get out at the best prices possible. They couldn’t care less about how it affects the average retail bull or bear. The next downtrend could be a very brutal one because most of those players would be trying to cash out especially those that have been waiting for higher prices. When they see the price falling, they will try to get out as fast as possible. However, before that happens they might have other plans. Now that everyone is betting on the price falling to $8,879 to fill the gap, the market makers and whales might have an opportunity to pull off another short squeeze. 

It can be masked under the S&P 500 (SPX) making a new all-time high or EUR/USD having further room to rally towards the 61.8% fib retracement level. Both of those are true but they wouldn’t justify a manipulated pump as before. Bitcoin (BTC) shot up past the 200 day EMA in a very unusual way. There are only two possibilities here. Either that move was a result of real buying interest and the price will find support on the 200 day EMA and break the descending channel to rally towards a new all-time high or it was a fake move (institutional exit) that will lead to massive downside in the near future if Bitcoin (BTC) falls below the 200 day EMA. In my opinion, it was big players exiting the market. I think we are a long way from seeing the end of this bear market just yet and I expect the price to decline below $3,000 to find its true bottom.