The value of Bitcoin may potentially decrease to $78,000, largely due to fringe risks in the U.S. economy. This potential drop is being linked to the existence of a gap in the Chicago Mercantile Exchange (CME) Bitcoin futures chart. The CME gap is a popular technical analysis feature that often predicts potential price corrections.
Historically, approximately 90% of CME gaps have been filled, meaning price action eventually moved to the price level where the gap occurred. The current gap was created during the weekend when the Bitcoin futures market was closed, while the cryptocurrency market remained open. The price of Bitcoin surged over the weekend, creating a gap in the futures market.
This gap appears between $74,000 and $78,000, suggesting that Bitcoin's price might correct to that level to fill the gap. However, it's essential to note that not all gaps fill immediately and some may take days, weeks, or even longer.
The U.S. economy's fringe risks that could potentially trigger this correction include potential tax hikes and inflation concerns. The Biden administration's proposed increase in capital gains tax has particularly caused unease among investors. Furthermore, inflation fears are growing due to the Federal Reserve's ongoing expansive monetary policy, which some economists worry could devalue the dollar.
However, despite these concerns, many crypto experts remain bullish about Bitcoin's long-term prospects. They believe the increasing institutional interest in digital assets, the growing recognition of Bitcoin as a 'digital gold,' and the ongoing trend of currency digitization worldwide could drive its price higher in the future.
Bitcoin's price volatility is a reminder that while the potential for high returns exists, so too does the risk of significant losses. Those investing in cryptocurrencies should always be prepared for the possibility of sudden price changes and ensure they are making informed investment decisions.