Bitcoin Volume & OI Records a Sharp Reversal, What About the $9,600 CME Gap?
Bitcoin is in no rush, sitting above $10,000.
The leading digital currency is comfortable at its key psychological level, which continues to hold strong.
Yesterday, bitcoin gained momentum but soon lost it around $10,500 that has it back at about $10,250 today, following the equity market, which saw an uptick only to move back down. Even gold has taken to ranging ever since hitting a new peak earlier last month.
BTC is currently in the red while managing $1.5 billion in “real” trading volume.
In the futures market as well, the volume is slowing down.
Down We Go!
On CME, the volume traded by bitcoin futures continues its descent to under $500 million from the high of $1.1 billion on Sept. 2nd. The same is the case for Bakkt, which fell to just $42 million on Wednesday, from the high of $147 million on August 25th.
Total open interest, meanwhile, which went as high as $5.7 billion on August 17th, is currently under $4 billion, as per data source Skew.
Pointing to this sharp drop in open interest in both USD and BTC terms in line with the price, trader Crypto Squeeze says, generally when the price goes down, and OI dips too, “it signifies a weakening (dump) trend while trying to find a bottom. The question is, how low in OI is low enough?”
The trader says he will be looking for the CME gap at $9,600 to fill.
Or Do We?
However, on-chain analyst Willy Woo argues that it isn’t necessary for the CME gaps to fill. He said,
“I'd say there's a fair chance this CME gap may not get filled, so far it's been front-run for liquidity. Every dip snapped up. If so, it'll be the first CME gap on daily candles that remains unfilled.”
Analyst Mati Greenspan agrees with this that gaps aren’t always filled, “they just usually are,” which isn’t because there is a gap but “because markets are volatile and prices have a tendency to repeat themselves.”
Interestingly there have been unfilled gaps present at $3,000, $16,000, and $19,000.
Such anomalies occur because while CME follows the traditional working order and the market gets closed from 16:00 Central Standard Time (CST) on Fridays until Sunday 17:00 CST, crypto exchanges operate 24/7.
Maybe? Let’s See!
According to a study by MarketScience, all the gaps in CME price data formed since the launch of bitcoin futures in Dec. 2017 on the weekend, has been eventually filled over 95% of the time.
While some gaps don’t fill for an entire year, 77% of them get filled in with the retracements in the subsequent week.
Now, it’s to be seen when and if these gaps will fill as well.
Meanwhile, what the market is clear about is that we are in a bullish phase with fundamentals pointing in the same direction. And as per Woo, BTC’s risk-on weighting will only reduce over time.