Bitcoin CME gaps at $35,000, $27,000 and $21,000, which one gets filled first?

FXStreet
Updated Aug 22, 2023 06:39

Due to the Chicago Mercantile Exchange (CME) not trading over the weekends, price gaps known as "CME gaps" exist for Bitcoin. Currently, there are three unfilled gaps for BTC: two on the upside at $35,000 and $27,000, and one on the downside at $21,000.


What is a CME gap?

Starting from December 2017, Bitcoin (BTC) futures products have been listed by the Chicago Mercantile Exchange (CME). Since then, CME's BTC futures data has been crucial in identifying institutional flows and interest.


While cryptocurrency trading operates 24/7, CME's BTC futures trading takes weekends off. As a result, a gap exists between Friday's closing price and Monday's opening price, which is commonly referred to as a "CME gap" within the crypto community.


Do CME gaps self-heal?

Since their launch in 2017, CME's Bitcoin futures have consistently shown weekend gaps. However, investors have noticed that these gaps often get filled as the price moves upward. This regular occurrence has driven investor behavior, with traders anticipating gap fillings and creating a self-fulfilling prophecy.


The most recent CME gap formed after the crash on August 17th, expanding from $27,005 to $27,485. The other two gaps are at 31% and 19% away from the Friday's closing price of $26,070. The upper range is $34,445 to $35,180, while the CME downside range is $20,330 to $21,110. So, will these three gaps be filled?


BTC CME 期貨 1 日圖

CME Bitcoin Futures daily price chart, Source: TradingView.


Which CME gaps are likely to be filled first?

Bitcoin's price has been in a downtrend, down nearly 20% since July 13th. With BTC hovering around the $26,000 level, there is a high probability of a minor recovery bounce. Therefore, the CME gap at that level is likely to be filled first.


Looking at the daily chart, the Relative Strength Index (RSI) has entered oversold territory for the first time in nine months, indicating an impending rebound. This retracement is expected to fill the CME gap from $27,005 to $27,485 and potentially attempt to move higher.


BTC/USDT 1 日圖

BTC/USDT daily price chart, Source: TradingView.


In rare cases, Bitcoin's price may break through the liquidity barrier at $30,400 stop-loss levels, but it is unlikely to gain upward momentum. If the price doesn't improve and hash rate increases, it could prompt Bitcoin miners to sell their earnings, disrupting the recovery and triggering a sell-off frenzy. In such a scenario, BTC might experience a sharp decline and touch the CME gap from $20,330 to $21,110.


* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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