Since the opening of today’s candle, Bitcoin went on a rollercoaster, dropping around $5,500 and recovering some of it already. On its way down, BTC filled the latest CME gap at about $29,000 and jumped back above $30,000 immediately after.
This raises speculations within the crypto community if this was a necessary correction triggered by the CME gap and if it’s already over.
CME Gap At $29K Filled
The Chicago Mercantile Exchange allows institutional investors to trade bitcoin on its regulated platform that operates between certain hours within the workweek and halts trading during weekends or official holidays.
While CME closes, though, bitcoin doesn’t. The free market asset trades 24/7, even on holidays, which could lead to forming the so-called CME gaps. They could appear in either direction after the regulated exchange opens on the first working day following a weekend.
That gap could be massive on some occasions, especially after a long weekend. This is what transpired in the past several days. CME closed on Thursday, December 31st (the last working day), with BTC’s price at $29,300, and the exchange opened for trading earlier today – January 4th.
In that time, bitcoin’s price went on a tear, broke above $30,000, and painted its latest all-time high of $34,800. Even with a slight decrease to $34,000, this meant that CME opened for trading today with a BTC price gap of almost $5,000.
History shows that the primary cryptocurrency tends to close such gaps with highly volatile moves. Today was such an example as BTC dumped in value shortly after CME opened to an intraday low of $27,700.
Interestingly, the asset’s price surged rather quickly after filling the gap and returned to north of $30,000. This raised the question if BTC’s correction is over. However, it’s worth noting that there’s another large CME gap left opened at $23,750 as the chart above shows.
A Necessary Bitcoin Correction?
Despite the mentioned above 20% retracement, it’s safe to say that bitcoin has been on a bull run in the past few months. As such, the rapid price drop could actually be a somewhat expected development, although it was painful for many traders.
During the previous significant rally in 2017, BTC endured several retracements before ultimately peaking just shy of $20,000.
Some of the most notable examples came in mid-September 2017 with a 20% drop from $3,900 to $3,200 in a day, and in mid-December, BTC plummeted from $16,600 to a daily bottom of $13,500.