The markets are bleeding out. Ether (ETH) dropped from $500 to $300 in a matter of days, people are screaming that the DeFi bubble has burst already, and are crying about their favorite “[insert food name] coin” crashing in value after a one-month-old Twitter account rug pulled 38K ETH from investors.
Yes, it’s just another week in crypto, but did anyone else notice that Tron (TRX) was pumping amidst all this?
Might just be a coincidence, but the last time this happened so quickly the entire crypto market bled out in the long, cold crypto winter.
Daily cryptocurrency market snapshot, Sep. 4. Source: Coin360.com
The Bitcoin “Bart” top
BTC/USD 4-HOUR chart. Source: TradingView
Bitcoin has shed 21% of its dollar value after dropping from $12,500 to sub $10K levels in just two weeks, leaving the popularized “Bart” pattern staring us in the face.
But when the leading digital cryptocurrency by market capitalization makes such a dramatic move, it pulls (for the most part) every other crypto asset down with it.
The top of this particular chapter in the history of Bitcoin was about $12,500, with many now questioning where the bottom could lie. So in this week’s analysis, I will look at three potential scenarios of how to identify the bottom.
The CME gap
BTC1! CME 4-hour chart. Source: TradingView
Most seasoned Bitcoin traders are aware of the CME gap, for those yet to be exposed to this sorcery let me explain. Bitcoin is a 24/7 tradable asset. The CME, however, is only actually open 23 hours per day, beginning Sunday evening at 5∶00 pm Central Time and ending at 4∶00 pm CT Friday afternoon.
This means there are windows where gaps can occur, typically these occur on weekends when the market closes on a Friday and reopens on a Sunday evening. However, traders can still trade the asset 24/7 using what the CME refers to on their website as the following:
“Rule 526, and EFRPs (Exchange for Related Position), pursuant to Rule 538, may be negotiated/executed 24/7 and…