A significant gap in the Chicago Mercantile Exchange CME Bitcoin futures contract near $75,000, suggests a potential downside move for Bitcoin BTC/USD in the short-term, according to Joe McCann, founder of Asymmetric.
What Happened: McCann’s analysis from Tuesday paints a bearish picture, shifting away from previous bullish sentiments, as he notes a confluence of technical and macroeconomic indicators pointing toward a near-term price correction.
McCann highlighted several factors supporting his short-term bearish outlook, including technical patterns, market liquidity and broader economic conditions.
“The month of December printed a shooting star candle,” McCann noted, a technical signal that historically indicates bearish sentiment.
“There is a massive gap to be filled in the CME Bitcoin futures product…down near $75,000,” he added.
According to McCann, Bitcoin’s recent price action has shown weakness, with Tuesday’s movement described as “a classic rejection beneath a multi-month regression channel.”
He sought to highlight the significance of the 10-month moving average, which has historically acted as a pullback level during bull markets.
“In this case, the 10 MA is right around…$75,000,” McCann stated.
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The bearish narrative isn't solely rooted in technical indicators. McCann also flagged a contraction in global liquidity, noting that “nearly $1 trillion in nominal terms” was drained last week alone.
This tightening liquidity, compounded by a recent contraction in Tether's outstanding supply, adds to the uncertainty in the crypto market.
“Tether's supply peaked the day after the FOMC crashed the markets,” McCann observed, marking a potential shift in sentiment.
On the macroeconomic front, McCann drew attention to the U.S. dollar's unexpected strength, which he labeled a “problem for risk assets, especially Bitcoin.”
He elaborated on the peculiar market dynamics: “The $DXY actually moved up on a day the Fed cut interest rates…smashing through a multi-year resistance level that is now turning into support.”
What’s Next: Despite his current bearish stance, McCann remains optimistic about Bitcoin's long-term trajectory.
“Higher is my meme forever,” he said, suggesting that Bitcoin's upward march to new all-time highs would resume in due time. However, for now, he emphasized a tactical approach. “The easy money is over. It's time to be tactical, and for now, I'm tactically bearish.”
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