Bitcoin’s Drop Has Put Bulls on the Defensive; Here’s What May Spark a Further Sell Off

Bitcoin’s recent bullishness has been thwarted by bears who have attempted to push the cryptocurrency back down to its support within the lower-$7,000 region, and it is imperative for bulls to support BTC above this region if they want to further extend their upwards momentum.

Analysts are noting that Bitcoin’s current market structure does appear to favor bulls, and an unfilled gap on the crypto’s CME future’s chart may signal that further losses are imminent for the embattled cryptocurrency.

Bitcoin Plummets 4% After Bulls Fail to Maintain Upwards Momentum

At the time of writing, Bitcoin is trading down 4% at its current price of $7,290, which marks a notable retrace from its daily highs of $7,600 that were set at the peak of the recent price rally that was halted when it reached this resistance region.

Following the sell-off that was sparked by Bitcoin’s movement to resistance at $7,600, the crypto was able to find significant support around $7,200 that allowed it to climb back up to highs of $7,550 before it once again found significant resistance that halted its momentum.

BTC is currently hovering around its key support that exists within the lower-$7,000 region, and a failure to hold above this level could spark another capitulatory drop into the $6,000 region.

HornHairs, a popular crypto analyst on Twitter, explained in a recent tweet that he is looking to short BTC until it reaches its open CME futures gap below $7,200, which could be where it finds support that allows it to climb higher.

“$BTC short scalp. Gap wasn’t completely filled on the CME chart… With price looking to close as a sweep into a fresh supply zone at the moment, I think there’s a good chance we close the rest of the gap next,” he said while pointing to the chart seen below.

Analysts Agree: CME Gap Likely to Spark Further Downside

Many investors believed that yesterday’s drop had filled the open CME gap, but it appears that this is not the case and that it is still open.

Gainzy, another popular cryptocurrency analyst, concurs with HornHair’s assessment, and recently explained that the open CME gap could mean that further losses are imminent for Bitcoin.

“Worth noting because anyone following $btc price action on bitmex will probably assume the gap recently opened was filled. It wasn’t,” he said while pointing to the chart seen below.

https://twitter.com/cryptogainz1/status/1209472821262508033?s=21

The coming hours and days will offer significant insight into where Bitcoin is heading next, as a lack of bullishness after filling this gap could mean that BTC will see significantly further downside in the near-term.

Featured image from Shutterstock.