By now, you must have seen multiple people discussing the $10K CME gap on Bitcoin. But what is it, and why is it important?
Understanding Bitcoin Trading on CME and the Phenomenon of CME Gaps:
What is CME?
The Chicago Mercantile Exchange (CME) is one of the world’s leading financial exchanges for trading various derivatives, including Bitcoin futures. Launched in December 2017, Bitcoin futures allow investors to speculate on its price movements without directly owning it.
What Are CME Gaps & How Are They Formed?
Crypto is a 24/7 market but traditional markets aren’t. CME gaps refer to price disparities on the Bitcoin futures chart between the closing price on one trading day and the opening price on the next. Most importantly, CME operates on a schedule similar to the traditional markets and closes during weekends and certain holidays.
Do All CME Gaps Get Filled?
Until making this post, I believed no, but upon research I found out that they all do. Maybe through a wick or a proper candle, but they do. Can take months, maybe years, but they all get filled.
Current Unfilled CME Gaps
As of now, CME has two major gaps. 1. After Trump won the election in Nov’24 – $77,815 to $80,670. This was filled half till $78,695. Though the remaining gap is not too big, but the charts show a lot of liquidity at 76-77K 2. When POTUS Trump mentioned BTC, yesterday, $85K to $95K!! Roughly $10K gap, biggest in the history of CME.
Implications for Traders
Traders often view CME gaps as potential support or resistance levels. The anticipation of gap fills can influence trading strategies, with some traders positioning themselves to capitalize on these movements.
Conclusion
Understanding CME gaps is crucial for Bitcoin traders, as they can offer insights into potential price movements and market sentiment. However, it’s essential to remember that while gaps provide valuable information, they should be considered alongside other technical and fundamental analyses when making trading decisions. The gaps gets filled, timing remains unpredictable.
