You probably heard about #CME gap filling but have no clue what it is and why it is so important for #Bitcoin or the whole crypto market, Here is a thread to explain ๐งต ๐
โญโญRepost will be appreciated โญโญ
โญ๐จ๐ป๐ฑ๐ฒ๐ฟ๐๐๐ฎ๐ป๐ฑ๐ถ๐ป๐ด ๐๐ต๐ฒ ๐๐ ๐ ๐๐ฎ๐ฝ ๐ถ๐ป ๐๐ถ๐๐ฐ๐ผ๐ถ๐ป ๐ง๐ฟ๐ฎ๐ฑ๐ถ๐ป๐ด
Imagine you're watching your favorite show, and it goes off the air for a weekend, but when it comes back, the episode starts with a completely different scene than where it left off. That's kind of what happens with Bitcoin's price on the Chicago Mercantile Exchange (CME) when it creates what's known as a "CME gap."
โญ๐ช๐ต๐ฎ๐ ๐ถ๐ ๐ฎ ๐๐ ๐ ๐๐ฎ๐ฝ?
A CME gap in Bitcoin's chart occurs because while Bitcoin trades 24/7 on most platforms, the CME, where Bitcoin futures are traded, has specific trading hours and is closed on weekends. Here's how it works:
Friday Close: Let's say Bitcoin's price on CME closes at $30,000 on a Friday.
Weekend Movement: Over the weekend, Bitcoin might jump to $33,000 due to news or market sentiment, but this isn't reflected on the CME because it's closed.
Monday Open: When CME opens on Monday, Bitcoin doesn't start trading at $30,000 where it left off. Instead, it begins at $33,000, creating a gap on the price chart between $30,000 and $33,000.
โญ๐ช๐ต๐ ๐๐ผ ๐ง๐ต๐ฒ๐๐ฒ ๐๐ฎ๐ฝ๐ ๐ ๐ฎ๐๐๐ฒ๐ฟ?
Price Reversion: Often, traders watch these gaps because there's a tendency for Bitcoin's price to move back to fill this gap, meaning it might drop back to $30,000 or close to it before continuing its trend. This happens because traders might see the gap as an overreaction or an opportunity.
Trading Strategy: If you're trading, you might bet on Bitcoin moving back to fill this gap. For instance, if you believe Bitcoin will drop back to $30,000, you could sell at $33,000, aiming to buy back cheaper at $30,000, making a profit from the price difference.
Market Sentiment:These gaps can also reflect significant changes in market sentiment or big news over the weekend that wasn't priced in earlier.
๐๐ ๐ฎ๐บ๐ฝ๐น๐ฒ ๐ถ๐ป ๐ฆ๐ถ๐บ๐ฝ๐น๐ฒ ๐ง๐ฒ๐ฟ๐บ๐:
Think of it like a game of catch-up. If you and your friend are playing a game where you have to match numbers, but you can only play on weekdays, and over the weekend, your friend moves the number from 30 to 33 without you, when you come back on Monday, you'd start at 33. But, because you both usually like to match numbers, there's a good chance you'll go back to 30 before moving forward again. That's your CME gap โ a space in the game where the numbers didn't match up due to a break in play.
In Bitcoin's world, these gaps are like little mysteries or opportunities for traders, watching and waiting for #Bitcoin to catch up or move on, providing insights into where the price might go next based on past behavior and market dynamics.
