Bitcoin prices fell 20% on Monday 4th January, the first trading day for the year 2021.
Bitcoin was trading at over 34000 USD/BTC on Sunday, 3rd January. When the US markets opened on Monday, the price suddenly dropped below 28500. Keeping true to its track record of volatility, the price picked up soon after.
On 5th Tuesday, the price was over 35500 USD again.
Analysts and market commentators have noted that the sudden drop in the price may have been caused by a “gap fill” in the CME futures market. A “gap fill” is when there is a major break between the time of last market close and the next market start. Bitcoin market is a true 24hr market and there is no market close. Traders can buy and sell bitcoin anytime during the day. Unlike bitcoin, the bitcoin futures market in CME does not operate on the weekends. When the market comes back from a break, there can be significant changes in the prices, jumping up or down, causing a gap from the last trade before the market stopped and the first trade after market started. Bitcoin market may have simply reacted to the price change in the CME futures market.
