Bitcoin Faces $2,000 Gap as Traders Eye $100K Rally

Bitcoin is currently navigating through a complex market landscape, with two significant CME gaps presenting both bullish and bearish scenarios. The pseudonymous crypto analyst and trader BitBull highlighted this situation in a recent analysis, noting the volatility Bitcoin has experienced since reaching a two-month peak above $98,000 on May 2.

CME gaps occur due to the differences in trading hours between the CME futures market and the continuous trading of Bitcoin. These gaps can provide insights into potential price movements as traders often anticipate the price will return to fill the gap. The first CME gap occurred on April 22, with Bitcoin closing at $91,415 and opening at $93,915, creating a gap of over $2,000. The second gap materialized on May 2, during the ongoing recovery push, with Bitcoin closing at $97,680 and opening at $96,455.

With Bitcoin currently trading around $94,775, the first CME gap between $91,415 and $93,915 is below its current position, while the second gap between $96,455 and $97,680 is above. The market's behavior in filling these gaps is influenced by traders' expectations, making it more likely for these gaps to be filled as traders position themselves for such moves.

BitBull suggests that due to the current price correction, the market may attempt to push Bitcoin toward filling the bearish gap, potentially dropping to the $93,015 to $91,415 range. However, she also notes that this price drop could help the bulls build the necessary strength for a reversal, potentially leading to a rally above $100K. Investment analyst Tuna Kaya shares a similar view, believing that $100K would mark Bitcoin’s next target if it recovers from a region he believes marks the lower band of an ascending channel.

It is important to note that some CME gaps never get filled, making BitBull’s forecast uncertain. Another analyst, Paxton, suggests that Bitcoin has formed a cup-and-handle pattern on the 1-week chart, indicating a potential upsurge following the pullback to retest the handle breakout.

In summary, Bitcoin's current market position presents two potential scenarios: a drop to fill the bearish gap or a rally to fill the bullish gap. The market's behavior and traders' expectations will play a crucial role in determining which gap gets filled first. However, it is essential to remember that CME gaps do not always get filled, and the market's volatility adds an element of uncertainty to any forecast.