When it Comes to Bitcoin Futures, Do We Need to Mind the Gap?

As bitcoin (BTC) marches back towards $30,000, traders will look to its market structure for clues, and find the CME futures market showing a “gap” from early March.

Thursday’s 3.7% climb to $29,900 halted just shy of that psychological price tag — a region that’s proved tough to break out of with conviction for the past two and a half weeks. Bitcoin is currently trading roughly flat on the day at $29,200.

As speculation mounts as to the asset’s direction, some traders have begun to question whether a CME futures “gap” — near $20,000 — is expected to be filled sometime this year.

The substantive distance between $20,300 and $21,100 has some speculating a retest for prices nearer to those levels.

A CME gap for bitcoin refers to a price discrepancy that occurs on the Chicago Mercantile Exchange bitcoin futures chart between the closing price of one trading day and the opening price of the next trading day.

Gaps occur because the bitcoin spot market trades 24/7 on various centralized exchanges, from which CME derives its Mark Price, while the futures market only trades Sunday through Friday, from 6:00 pm to 5:00 pm ET.

CME Bitcoin Futures, daily time frame; Source: TradingView

The significance of a CME gap for bitcoin is a topic of debate among traders and analysts.

Some believe that gaps on the CME chart can act as significant support or resistance levels, as prices typically tend to fill the gap at a future date. Others argue that CME gaps are simply a technical phenomenon with no real predictive value.

Still, their appearance on the daily chart tends to be relatively rare, providing further credence to traders looking to derive a directional bias.

One notable CME gap for bitcoin last appeared on Jan. 13 between $20,000 and $20,700. That was later filled on March 10 — the day of the failure of Silicon Valley Bank — when prices dipped to a low of $19,520. 

Last year, as prices began to collapse from $30,000 to $17,000 in June, a relatively large $1,400 gap formed on June 10, between $28,700 and $27,300. That was recently filled earlier this month when prices drove higher.


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Source: https://blockworks.co/news/bitcoin-futures-march-2023-gap