What is current CME Gap at Bitcoin and if not filled yet, Will it be?

Answered at Oct 17, 2024

Understanding the CME Gap in Bitcoin Trading

What is a CME Gap?

The CME gap refers to the price difference that occurs between the closing price of Bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on Sunday. This gap arises because the CME Bitcoin futures market is closed over the weekend, while the cryptocurrency market operates 24/7. When significant price movements occur during the weekend, a gap is created between the Friday closing price and the Sunday opening price (Binance).

Current CME Gaps

As of October 2024, there are three notable unfilled CME gaps for Bitcoin:

  • Upside Gaps:
    • $35,000
    • $27,000
  • Downside Gap:
    • $21,000

These gaps represent potential levels where the price might gravitate towards, as traders often anticipate these gaps to fill (Mitrade).

Will the CME Gaps Be Filled?

Historically, CME gaps have shown a tendency to fill, often due to the self-fulfilling nature of traders' expectations. When many traders anticipate a gap fill, their collective actions can drive the price towards the gap, reinforcing its significance (OKX).

Factors Influencing Gap Filling

  1. Market Sentiment:

    • If the gap is upwards, it indicates bullish sentiment over the weekend. Conversely, a downward gap suggests bearish sentiment (OKX).

  2. Speculative Trading:

    • Traders often engage in speculative trades based on CME gaps. If Bitcoin resumes trading at a higher price than the last close, some investors might sell, expecting the price to correct downward. Similarly, if it opens lower, they might buy, anticipating an upward correction (Market Realist).

  3. Historical Patterns:

    • Since the launch of Bitcoin futures on CME in 2017, gaps have frequently filled, sometimes within hours, days, or even months (Trading Digits).

Conclusion

The current CME gaps at $35,000, $27,000, and $21,000 are significant markers for traders. While these gaps often fill, relying solely on them for trading decisions can be risky. Traders should consider other indicators and market dynamics to make informed decisions. Understanding the CME gap provides valuable insights into market sentiment and potential price movements, making it a useful tool in a trader's arsenal (Binance).