Bitcoin

Motor of a new Bitcoin rally? BTC crash closes the CME futures gap and fills 1 billion US dollars

A large Bitcoin (BTC) futures gap in the Chicago Mercantile Exchange (CME) was closed when the BTC / USD pair suddenly fell below $ 54,000 on February 22nd.TO

A CME gap arises when the price of Bitcoin goes up or down after the CME closes on weekends or bank holidays in the US.

Unlike most cryptocurrency exchanges, CME’s Bitcoin futures market isn’t always open. A gap is forming between CME and many Bitcoin trading platforms.

BTC / USDT (Binance) 4-hour chart. Source: TradingView.com

Why is the CME Bitcoin Gap Significant?

Motor of a new Bitcoin rally?  BTC crash closes the CME futures gap and fills 1 billion US dollars
Motor of a new Bitcoin rally? BTC crash closes the CME futures gap and fills 1 billion US dollars

The CME gap is sometimes viewed as a large gap that needs to be closed in order for Bitcoin’s rally to continue in the short term.

For example, the final void was formed when the price of Bitcoin topped $ 58,000 on major cryptocurrency exchanges. while the CME Bitcoin futures market was closed for two days.

Such as, There was a gap of $ 55,504, which closed when the price of Bitcoin fell sharply after the new weekly candle opened.

Bitcoin has a tendency to correct itself drastically shortly after a new weekly candle is openedThis eliminates over-leveraged longs and brings some balance to the market.

Before opening the weekly candle The funding rate of the Bitcoin futures market was between 0.1% and 0.15%.This is 10-15 times higher than the standard funding rate of 0.01%.

Although Bitcoin’s funding rate has remained relatively high throughout the bull cycle, A funding rate of 0.15% indicates that the market is extremely crowded.

The combination of a high rate of Bitcoin futures funding, the presence of a CME void, and the deposit of whales on major U.S. exchanges likely fueled the decline.

Large deposits were found in Gemini

Before looking back CryptoQuant found that large deposits of BTC were transferred to Gemini, one of the largest cryptocurrency exchanges in the US.

When whales deposit BTC on exchanges, generally indicates an intention to sellTherefore Some whales have likely benefited from their positionswhich in a short period of time led to a sharp decline in the market.

Yet, Whales selling large amounts of Bitcoin can cause a bigger correction than usual because it leads to cascading liquidations on the futures market.

Many over-leveraged longs can be liquidated one after the other. Reinforce the impact of whale sell-offsThe data show that over the past 24 hours Futures contracts valued at over a billion dollars were executed.

After the fall Traders expect a gradual recovery.TO Scott Melker, Cryptocurrency trader and technical analyst, Recent history shows that falls don’t last long.TO Wrote::

“I have no idea what’s going on here but recent history shows that the declines didn’t last long. I’d like to see another slow rise after this sell-off. Of course we could fall, but every step like this one lately was an opportunity to buy. “

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