bitcoin Faces Potential Weakness Amid Divergence Signals and CME Gap

Key Insights on bitcoin‘s Current Market Position

• A hidden bearish divergence on the RSI indicates a decline in bullish momentum for bitcoin.
• A CME gap between $114,000 and $115,000 may draw bitcoin‘s price downward.
• Current market indicators suggest bitcoin is in a distribution phase.

bitcoin (BTC) is exhibiting signs of potential weakness, with several key indicators pointing to the possibility of new weekly lows in July. While the long-term trend remains positive, traders should prepare for short-term fluctuations.

Hidden Bearish Divergence Signals Weakening Momentum

Recent analysis reveals a hidden bearish divergence between bitcoin‘s price and the relative strength index (RSI), a tool used to gauge the strength of price movements. This divergence occurs when prices reach higher highs while the RSI shows equal or lower highs, suggesting a weakening bullish momentum that could lead to price corrections.

This pattern was notably present in March 2024, which preceded a significant 20% drop in bitcoin‘s price shortly thereafter. The current divergence may similarly foreshadow another downward adjustment, potentially resulting in new short-term lows for bitcoin.

CME Gap: A Potential Downside Magnet

A CME gap has been identified between $114,380 and $115,635 on the daily chart. These gaps arise when bitcoin trades outside of regular hours on the Chicago Mercantile Exchange, creating price voids that often get filled during active trading periods.

Historically, bitcoin has shown a tendency to “fill” these gaps, meaning it often retraces to cover the untraded range. In 2025, seven out of nine CME gaps have already been filled, leaving this gap and another smaller one between $91,970 and $92,450 open. This high fill rate suggests that bitcoin may revisit these levels, leading to a potential short-term decline to close the gap around $114,000.

bitcoin Enters Distribution Zone

According to crypto analyst Gaah, the Index bitcoin Cycle Indicators (IBCI) has entered a distribution zone, a phase typically associated with market exuberance and temporary peaks. This marks the third occurrence of such an entry in the current bull cycle.

While the index has only reached the lower end of the distribution zone (80%) and not the peak (100%) seen in previous cycles, it still serves as a cautionary signal. Key metrics like the Puell Multiple and Short-Term Holder Spent Output Profit Ratio (STH-SOPR) remain below mid-levels, indicating that retail speculation and aggressive profit-taking by miners have not yet reached their zenith. Gaah emphasizes that the behavior of the IBCI is a critical warning: while there is a high risk of short-term corrections, it does not necessarily indicate a major end-of-cycle peak.

This analysis underscores the importance of vigilance in the current market environment, as bitcoin navigates through potential volatility and corrective risks.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. All trading and investment decisions carry risks, and readers are encouraged to conduct their own research.

Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.