Looming Bitcoin futures gaps and mainstream interest are providing the perfect environment for another week of volatility.
Bitcoin (BTC) begins a new week at over $11,000 after a wild weekend saw the market crash $1,200 in minutes — will the chaos continue?
Cointelegraph gives you five factors that could easily impact Bitcoin price action over the coming days.
Bitcoin futures gaps keep building
More than usual, this week looks set to be big in terms of Bitcoin-specific market phenomena.
In recent months, there have been macro factors that dictate general price trajectory, with BTC/USD showing a strong correlation to stock markets in particular.
After two weeks of much more volatile activity, however, Bitcoin has decidedly divorced itself from the action in stocks. Analysts’ attention is now turning to Bitcoin’s own derivatives traders.
On Monday, CME Group’s Bitcoin futures opened noticeably lower than where they left off last Friday. The resulting “gap” in the market — between $11,450 and $11,600 — may well form a short-term price target.
As Cointelegraph often reports, Bitcoin has a tendency to rise or fall to “fill” CME futures gaps. Other than this weekend, however, another gap remains unfilled, this time much lower — between $9,660 and $9,930.
For Cointelegraph Markets analyst Michaël van de Poppe, the area $1,000 above the lower gap was now necessary to hold as support — $10,800.
“If we lose that support, then most likely I’m going to target the support we had previously which is the area around $10,000, which is also the CME gap,” he summarized in a new video update.
CME Bitcoin futures chart showing two gaps. Source: TradingView
Warnings over US dollar’s downfall
At press time, with stock markets slowly opening up to relatively flat conditions, BTC/USD was yet to target new levels after sticking to $11,200 over the past 24 hours.
Changes in global economic sentiment still have considerable sway over Bitcoin investment. This week, attention will focus on the heat between the United States and China, along with fresh coronavirus stimulus measures from Washington.
The situation is precarious — Bitcoin’s rise over the past few weeks has come as the dollar sees a protracted fall. At the same time, investors have rushed into safe havens such as gold and silver.
Continued USD weakness may come to form a new bullish signal for Bitcoin price action, whether or not it is merely a function of coronavirus response.
“The currency bet is mainly a bet on relative control of the virus, not reflecting the fundamental strength of the economies in question,” Stephen Jen, CEO of United Kingdom macro investment firm Eurizon SLJ Capital, told Bloomberg.
One news story which may have much broader implications than merely social and political is U.S. President Donald Trump’s plan to ban Chinese social media platform TikTok.
The video-based platform has become the target of increasing conflict between Beijing and Washington, with Trump citing national security concerns due to its operations.
On Sunday, Cointelegraph reported on why banishing TikTok could impact cryptocurrency markets.
The platform’s power has already been aptly demonstrated — a user-led publicity campaign to revive the fortunes of meme-based altcoin Dogecoin (DOGE) delivered huge gains within a matter of days.
Gold on track for $2,000
Gold sentiment may act as a precursor to any changes in Bitcoin’s progress. The precious metal remains at all-time highs in USD terms, on track to pass the psychologically significant $2,000 mark.
“Gold has risen 8 weeks in a row, finishing with its highest monthly close ever. Silver is also up 8 weeks in a row, with its highest monthly close since April 2013,” gold bug Peter Schiff summarized on Friday, adding:
“The U.S. Dollar Index has now fallen for 6 consecutive weeks, with the lowest monthly close since April 2018.”
Last week, Citigroup analysts were less bullish on XAU/USD, giving the chances of $2,000 appearing by the end of the year as 30%.
At press time, $1,973 suggested that investors may not have to wait so long.
XAU/USD 1-week chart. Source: TradingView
Consumer BTC interest is palpable
Hitting $12,000 over the weekend has nonetheless placed Bitcoin back in mainstream consciousness. Altcoins’ successes, particularly those of Ether (ETH), have added to press interest.
“People are trying to jump on momentum. The entire crypto market is a microcosm of everything happening in stocks,” analyst Mati Greenspan summarized to the Wall Street Journal.
Responding, Bill Barhydt, CEO of payment company Abra, revealed that consumer interest in cryptocurrency more broadly had definitively changed.
“Consumer interest in Bitcoin is definitely growing now,” he tweeted, adding:
“Abra has seen record deposit volume since we launched our Abra Interest Account last week. I've heard similar feedback from others.”
As Cointelegraph reported last week, data from Google Trends confirmed that price volatility had sparked a surge in search activity for both Bitcoin and gold.
Bitcoin futures aggregate open interest 1-month chart. Source: Skew
Back on derivatives markets, meanwhile, growing open interest and volume for Bitcoin options suggests that institutional investors remain firmly interested in short-term and mid-term profitability.
Altcoins aren’t done yet
Bitcoin is still tussling with altcoins in terms of profitability, with Ether continuing to crush long-term resistance on multiple timeframes.
Late July saw altcoins front-run BTC to the delight of investors, led by ETH/USD as trading of ERC-20 DeFi tokens exploded.
Ether reached $400 over the weekend, falling to $364 before maintaining its highest levels since August 2018.
BTC/USD vs. ETH/USD 1-month chart. Source: Skew
By contrast, BTC/USD did not manage a weekly close above $11,500, a psychological achievement that would have marked its best performance since the $20,000 all-time highs.
“Overall, Bitcoin is looking less strong than Ethereum,” Van de Poppe added in his update. The “make it or break it level” for now, he concluded, remains at $11,500.
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