Following the weekend crash that saw Bitcoin drop to lows of about $55,000, the market has opened with a CME gap of $5,000. The huge gap is the biggest in history, and most crypto price observers are wondering whether the price of BTC will shoot to cover it as witnessed in the past.
What Does the CME Gap Mean?
Chicago Mercantile Exchange (CME) launched Bitcoin Futures in 2017 that could be settled using cash. The product opened access to institutional investors to buy Bitcoin using an accredited platform from Monday to Friday. Trading closes for the weekend and resumes at the beginning of the following week.
When there’s a discrepancy between the closing price on Friday and the opening price on Monday, a CME gap is created. Currently, there was a gap of $5,000 since Bitcoin closed at $62,000 and slumped to $57,000 by Monday.
Implications of the CME Gap
In the past, Bitcoin prices have risen to close the gap within the first week. At the beginning of 2021, Bitcoin’s price rose by $4,500 and dropped by 45,00 but filled it in the same week.
If Bitcoin repeats itself and the coin shoots back to above $62,000, then it will have filled two CME gaps simultaneously. The previous one was from the other weekend and needed $1,000 to fill.
As much as Bitcoin prices are varying greatly between different exchanges, the gap in the CME charts will need to be filled somehow. When it comes to gaps, probability favors such gaps, especially in a bull market where the trading volume is high.