After Bitcoin's V-shaped reversal, the CME gap could be the biggest "risk"?
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After Bitcoin's V-shaped reversal, the CME gap could be the biggest "risk"?
Macro factors have caused the market to cool temporarily.
Navigating Web3 tides with focused insightsBy BitpushNews
Bitcoin staged a V-shaped reversal within the past 24 hours, dropping to an eight-week low of $90,000 before rebounding above $94,000 after U.S. equity markets closed, as bullish and bearish forces remain locked in tension. Over the past week, BTC has declined more than 7%. Although its market cap continues to hover around $1.864 trillion, its dominance has slightly dipped to 54.2%.
Macro Factors Cause Temporary Market Cool-Off
Experts attribute the recent pullback starting last week to stronger-than-expected U.S. economic data, including initial jobless claims and labor force participation rate. These figures have intensified concerns that interest rates may stay elevated longer than previously anticipated.
Chris Chung, CEO and founder of Titan, said: "The market seems very concerned that there may be no rate cuts in 2025, especially after Friday's incredibly strong jobs report. But we also saw a significant rally in December, so it's not unusual for the market to retrace after such a sharp move."
He noted that with President-elect Donald Trump’s inauguration scheduled for next week, the crypto market still faces "further downside risks."
"Everyone expects Trump to announce pro-crypto regulations on day one, but he might prioritize more pressing issues given Republican control of both the House and Senate. Combined with macro concerns and upcoming token unlocks, this market adjustment could extend into February or even March," Chung added.
James Butterfill, research lead at CoinShares, wrote in his weekly fund flows report: "The post-election honeymoon is over, and macroeconomic data is once again the key driver of asset prices."
Derivatives Data Show Sentiment Ranges from Cautious to Neutral
Notably, the response in Bitcoin derivatives markets has been relatively mild.
First, futures premiums remain elevated. Bitcoin futures contracts typically trade at a premium to the spot market, reflecting optimistic price expectations. Current annualized premium stands at 11%, above the neutral range of 5%-10%, indicating overall market optimism.
Another indicator is the perpetual contract funding rate, which generally reflects market sentiment. Although funding rates briefly turned negative on January 13 due to a surge in short positions—accompanied by $107 million worth of long liquidations—they quickly recovered to around 0.5% monthly, suggesting no sustained bearish sentiment.
CME Gap Pressure: Will It Be Filled?
Analysts point out a gap between $88,500 and $77,500 on CME Bitcoin futures. A CME gap occurs when there's a discrepancy between the closing price of a futures contract on one trading day and the opening price on the next, often creating a gravitational pull back toward that level. If Bitcoin faces downward correction, this gap could represent a potential bearish target.
Given Bitcoin’s current price of approximately $94,000, analysts suggest a drop from this level could trigger a substantial correction—potentially up to 18%—to fill the CME gap.
Besides the CME gap, veteran market analyst Peter Brandt and others have highlighted potential bearish signals on Bitcoin’s daily chart. Brandt pointed to a possible head-and-shoulders (H&S) formation, which could signal a decline toward $73,000. However, Brandt also cautioned against over-relying on such patterns, noting that Bitcoin’s high volatility often distorts technical formations.
Thus, Bitcoin’s current trajectory is shaped by a complex mix of factors. While derivatives markets remain relatively calm, the presence of a CME futures gap, potential head-and-shoulders pattern, and key support levels all increase the risk of downward price correction. Should Bitcoin continue to face selling pressure, market participants will closely watch whether the CME gap gets filled—a move that could spark significant volatility.
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