{"id":489816,"date":"2022-05-05T17:01:08","date_gmt":"2022-05-05T17:01:08","guid":{"rendered":"https:\/\/wncen.com\/?p=489816"},"modified":"2024-06-11T08:10:59","modified_gmt":"2024-06-11T08:10:59","slug":"bitcoin-futures-and-spot-signals-dont-match-up","status":"publish","type":"post","link":"https:\/\/wncen.com\/news\/bitcoin-futures-and-spot-signals-dont-match-up\/","title":{"rendered":"One Coin, Two Trades: Why Bitcoin Futures And Spot Signals Don’t Match Up"},"content":{"rendered":"
Bitcoin price<\/a> bounced to the tune of 5% following yesterday’s Federal Reserve meeting. However, the move has almost fully retraced. What’s interesting about the situation, is that traders at one particular platform could have seen this coming a lot more clearly, while others might have suffered a fake out.<\/p>\n Here is a closer look at a comparison between BTCUSD spot index price charts and BTC CME Futures that puts a spotlight on the strange discrepancy. We also shed some light on how to possibly take advantage when these instances occur.<\/p>\n The crypto market never sleeps. It trades night and day, 24\/7 days a week. Even stock market futures take a break for short periods. But when it comes to CME Group’s BTC futures contracts<\/a>, it more closely follows the stock market’s trading hours.<\/p>\n CME takes a break from Friday to Sunday evening. If Bitcoin price moves substantially during the time the trading desk is offline, it will leave a gap<\/a> on its chart that regularly becomes a target that gets “filled” in the following days.<\/p>\n Related Reading | Bitcoin Indicator Hits Historical Low Not Seen Since 2015<\/a><\/em><\/strong><\/p>\n Because certain spot market trading days are missing from the CME BTC futures chart, certain technical indicators<\/a> can produce minor deviations. More often than not, these minor discrepancies are early signs that a fake out is coming.<\/p>\n Need proof? In the chart below, we’ve compared the BTCUSD spot price index, BTC CME futures, and SPX futures. Bitcoin’s spot index produced a bullish crossover of the LMACD yesterday, while the CME chart remained bearish. Interestingly, the CME chart more closely mimics the popular US stock market index.<\/p>\n <\/p>\n The LMACD \u2013 the logarithmic version of the Moving Average Convergence Divergence<\/a> indicator \u2013 is considered a lagging indicator. For this reason, bullish or bearish crossovers are typically considered reliable signals to take or close a position.<\/p>\n It isn’t clear if the discrepancy above happened naturally due to the missing trading days from the chart, or if something else was at play. The crossover appears to have been used as a bull trap, clearing out any last minute longs. Momentum on the daily is currently bearish again, so there is risk of continued downside until it turns up again.<\/p>\n Related Reading | Time Vs Price: Why This Bitcoin Correction Was The Most Painful Yet<\/a><\/em><\/strong><\/p>\n Traders need not ditch the indicator altogether, but instead can use such discrepancies between the two indicator’s performance to try and predict when fake outs, stop runs, or other nasty moves will occur<\/a>.<\/p>\n The last time the LMACD produced a false signal on spot exchanges, yet not on the CME BTC chart, was the exact peak in November 2021. Is there a chance this latest fake out is a sign the bottom is in, or is it merely suggesting more downside ahead?<\/p>\n <\/p>\n Bitcoin bulls must push momentum back in their favor on daily timeframes, and follow through with enough strength to force higher timeframes to follow.<\/p>\n Follow <\/i><\/b>@TonySpilotroBTC on Twitter<\/i><\/b><\/a> or join\u00a0<\/i><\/b>the TonyTradesBTC Telegram<\/i><\/b><\/a> for exclusive daily market insights and technical analysis education<\/i><\/b>. Please note: Content is\u00a0educational and should not be\u00a0considered investment advice.<\/i><\/b><\/p>\n Bitcoin price bounced to the tune of 5% following yesterday’s Federal Reserve meeting. However, the move has almost fully retraced. What’s interesting about the situation, is that traders at one particular platform could have seen this coming a lot more clearly, while others might have suffered a fake out. Here is a closer look at a comparison between BTCUSD spot index price charts and BTC CME Futures that puts a spotlight on the strange discrepancy. We also shed some light on how to possibly take advantage when these instances occur. Why You Can’t Ever Sleep On Crypto Markets The crypto market never sleeps. It trades night and day, 24\/7 days a week. Even stock market futures take a break for short periods. But when it comes to CME Group’s BTC futures contracts, it more closely follows the stock market’s trading hours. CME takes a break from Friday to Sunday evening. If Bitcoin price moves substantially during the time the trading desk is offline, it will leave a gap on its chart that regularly becomes a target that gets “filled” in the following days. Related Reading | Bitcoin Indicator Hits Historical Low Not Seen Since 2015 Because certain spot market trading days are missing from the CME BTC futures chart, certain technical indicators can produce minor deviations. More often than not, these minor discrepancies are early signs that a fake out is coming. Need proof? In the chart below, we’ve compared the BTCUSD spot price index, BTC CME futures, and SPX futures. Bitcoin’s spot index produced a bullish crossover of the LMACD yesterday, while the CME chart remained bearish. Interestingly, the CME chart more closely mimics the popular US stock market index. BTC CME futures performs more on par with the stock market | Source: BTCUSD on TradingView.com How To Potentially Predict Bitcoin Fake Outs Using Spot Vs CME Comparison The LMACD \u2013 the logarithmic version of the Moving Average Convergence Divergence indicator \u2013 is considered a lagging indicator. For this reason, bullish or bearish crossovers are typically considered reliable signals to take or close a position. It isn’t clear if the discrepancy above happened naturally due to the missing trading days from the chart, or if something else was at play. The crossover appears to have been used as a bull trap, clearing out any last minute longs. Momentum on the daily is currently bearish again, so there is risk of continued downside until it turns up again. Related Reading | Time Vs Price: Why This Bitcoin Correction Was The Most Painful Yet Traders need not ditch the indicator altogether, but instead can use such discrepancies between the two indicator’s performance to try and predict when fake outs, stop runs, or other nasty moves will occur. The last time the LMACD produced a false signal on spot exchanges, yet not on the CME BTC chart, was the exact peak in November 2021. Is there a chance this latest fake out is a sign the bottom is in, or is it merely suggesting more downside ahead? The missing bullish crossover called the top in November 2021 | Source: BTCUSD on TradingView.com Bitcoin bulls must push momentum back in their favor on daily timeframes, and follow through with enough strength to force higher timeframes to follow. Follow @TonySpilotroBTC on Twitter or join\u00a0the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is\u00a0educational and should not be\u00a0considered investment advice. Featured image from iStockPhoto, Charts from TradingView.com<\/p>\n","protected":false},"author":517,"featured_media":489824,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3],"tags":[428,1119,1144,78790,6664,4524,76835],"class_list":["post-489816","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-bitcoin","tag-btc","tag-btcusd","tag-btcusdt","tag-crypto","tag-xbt","tag-xbtusd"],"acf":[],"yoast_head":"\nWhy You Can’t Ever Sleep On Crypto Markets<\/h2>\n
BTC CME futures performs more on par with the stock market | Source: BTCUSD on TradingView.com<\/a><\/pre>\n
How To Potentially Predict Bitcoin Fake Outs Using Spot Vs CME Comparison<\/h2>\n
The missing bullish crossover called the top in November 2021 | Source: BTCUSD on TradingView.com<\/a><\/pre>\n
Featured image from iStockPhoto, Charts from TradingView.com<\/pre>\n","protected":false},"excerpt":{"rendered":"