Bitcoin Futures at CME expire on Friday: What will be the impact on the market?

  • The expectations are rising as Bitcoin’s Chicago Mercantile Exchange (CME) Futures close this Friday in the middle of the market’s bearish trend. The price of Bitcoin could see a recovery.
  • As the Bitcoin Futures gap closes, short positions increase. The uncertainty about what will be the bottom of Bitcoin’s price, contributes to this trend.

The monthly Bitcoin Futures on the Chicago Mercantile Exchange (CME) are expiring this Friday. The event will take place against an inclement bear market which, as CNF has reported, could last until the middle of next year – the date on which the Bitcoin Halving will take place.

The Futures contracts issued by CME in December 2017 have been proven to have a direct impact on the price of Bitcoin. Since their issuance, these financial derivatives have reduced the price of the number one cryptocurrency in 75 percent of all cases – precisely in the week when the CME Bitcoin Futures are about to expire.

In Bitcoin’s recent history, these “gaps” have almost always been filled. They occur when Bitcoin’s price changes significantly during market closing times in the traditional CME financial market. Once the market is reopened, the difference between the closing price and the opening price becomes a “gap”. Since the CME only offers its cash settled Bitcoin futures during regular business hours during the week, some “CME Bitcoin Future Gaps” have arisen since December 2017.

Bitcoin priced with uncertain bottom

At the time of writing, Bitcoin’s price had fallen by about 15% in one month, when it reached the 10,000 USD barrier, and by 7% in the last 24 hours to reach $7,270 USD. As the closing of Bitcoin’s Futures in the CME approaches, so does the gap that has historically represented a big price movement.

In the technical analysis, the occurrence of a “gap” acts as a meaningful indicator of price movements. The nearest open gap is currently around 7,300 US dollars. Because of that some analyst expect that the short-term development of BTC could improve thanks to the “gap” to 7,300 US Dollars.

According to Skew Markets the level of market liquidity seems to be evaporating as investors secure long positions. However, uncertainty about when the price of Bitcoin will reach its bottom has had a possible negative effect.

Initially, analysts claimed that the best time to acquire long positions would be when Bitcoin reached 6,000 USD. According to analysts, Bitcoin has shown important support at this point. For now, the price has fluctuated and evaded this bottom.

The derivatives market has accumulated an average of 4.99%, as shown in the chart below, at the current time.

Will Bitcoin drop further?

In CNF’s recent analysis, experts gave their projections on the future of the price. Among the most optimistic are Cardano’s creator, Charles Hoskinson. He said the current downward trend in Bitcoin’s price serves to clean up the market and shake weak hands out of the market. In addition, there is also Brian Kelly, CEO of BKCM LLC, who said that traders’ move to short positions is a positive indication that Bitcoin is reaching a new low.

Among the most pessimistic, is Peter Schiff who assured categorically that the bear market will continue until the Bitcoin reaches 1.000 USD. However, although most analysts agree on the prolongation of the bear market, they also say that a rebound should occur around Halving. In the short term, as mentioned, the rally could occur due to the effect of the closing of the Bitcoin Futures gap in the CME, but in the long term the key to recovery could be found in the Halving.

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About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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