Bitcoin’s Roller Coaster Week: Ebbing and Flowing With Futures Expiry
Bitcoin has been on an interesting and energetic journey over the last couple of weeks. Having seen values soar by more than $2,000 as of Wednesday, pushing it beyond $11,500 to a staggering $14,000 with a record breaking volume of more than $44 billion dollars
While it enjoyed a brilliant rally, it also endured a similar kind of reversal in as many days starting off last night by European time, receding back to around $11,800 on Thursday.
What we can see from some of the above candlestick charts, especially from the large green candle alongside the equally substantial red candle, with Bitcoin managing to scrape at the incredibly rare $14,000 marker.
While this was more than a welcome surprise for investors, this price point was an unfortunately shaky one, with a range of fast movements and a general ‘feeling' of great heights from the market. As a result, a price correction was expected to be around the corner.
The moment that it manages to reach the $14,000 marker is also the time when we would all expect there to be a steady retreat away from it as BTC adjusts to newer heights. As it all looks pretty standard for the most part.
While this is the way the cookie crumbled for the Bitcoin market of 2017, the past is no clear indication of what the future holds for crypto. We have a pretty extensive lesson to take from the meteoric surge that Bitcoin underwent during 2017.
Back during that time in 2017, when Bitcoin successfully managed to push upwards from around $9,000 to around $12,000 all before staggering back down to about $9,000, with it managing to climb further up from thereafter.
In contrast, Bitcoin, while managing to do the same here, but at higher points of $14,000 and higher still before it reaches resistance levels at around $17,000.
Were it to have climbed up even further without any kind of correction then perhaps there may have been a more substantial reason for investors to feel concerned about the ongoing reversal, but the current dip that Bitcoin is experiencing is actually pretty healthy all things considered.
This is substantiated by the fact that CME Bitcoin futures officially close tomorrow, not before clocking in a truly amazing 132,455 Bitcoin representative contracts being exchanged over the course of yesterday along – totaling an incredible 1.5 billion dollars.
CME's Bitcoin Futures contracts have been at a pretty strong premium and continue to operate at the same level during the time this is published, with a longer premium rate placed on contracts for September as well, some of which are being priced at more than $600.
So what does this mean for Wall Street overall? Ultimately, its overall performance is basically in the green, but there is to be some loss expected with this as yet healthy performance.
While this is the case, there has been some noticeable one off market selling over the course of Wednesday evening. As a result of this news, it may be the case that Wall Street was responsible for the dip, while the June contract comes to a close on Friday.
This isn't so much of a surprise for more experienced investors, however, the dipping pattern ahead of the expiry of futures contracts has been happening with a degree of regularity over the past 3 months, almost like clockwork, with CME's futures design facilitating this trend.
While this may not essentially be something that is wholly unique to Wall Street, but with what we have previously seen with the likes of OKCoin, which had been regarded as one of the popular settled futures related to Bitcoin – this too had created a similar kind of ebb and flow pattern.