CME Gap (myth or reality?)

S

stevenpaul

I hear talk of a CME gap every day by self-styled pundits on youtube and elsewhere. I know my ego is set to take a good thrashing for disagreeing, but I have to say I'm just a little skeptical that this is a reality at all. Would anyone care to second my skepticism, or perhaps set me straight with an actual argument.

I understand that CME gaps have an 80% chance of being filled (the official number according to this video. Here, the speaker says that when a CME gap forms, "they usually close that gap just to rebalance their books."

I for one have no idea what that means at all. How are traders of CME futures capable of manipulating the spot price of bitcoin? The liquidity of the spot market is almost always far greater than that of the futures market. How would futures traders drive the price of the spot market?

And what is that expression "rebalance their books" supposed to mean? "I'm holding a losing short position so I had better drive the price down in order to rebalance." That's a bit complacent isn't it? It's always nice if the market comes back down when one is short, but the notion that this is just business as usual seems all too easy, even for exalted futures traders.

Much more plausible is that the CME gap was a dead cat bounce and the market just went for normal reasons (or vice versa in up trends).
 
stevenpaul said:
I hear talk of a CME gap every day by self-styled pundits on youtube and elsewhere. I know my ego is set to take a good thrashing for disagreeing, but I have to say I'm just a little skeptical that this is a reality at all. Would anyone care to second my skepticism, or perhaps set me straight with an actual argument.

I understand that CME gaps have an 80% chance of being filled (the official number according to this video. Here, the speaker says that when a CME gap forms, "they usually close that gap just to rebalance their books."

I for one have no idea what that means at all. How are traders of CME futures capable of manipulating the spot price of bitcoin? The liquidity of the spot market is almost always far greater than that of the futures market. How would futures traders drive the price of the spot market?

And what is that expression "rebalance their books" supposed to mean? "I'm holding a losing short position so I had better drive the price down in order to rebalance." That's a bit complacent isn't it? It's always nice if the market comes back down when one is short, but the notion that this is just business as usual seems all too easy, even for exalted futures traders.

Much more plausible is that the CME gap was a dead cat bounce and the market just went for normal reasons (or vice versa in up trends).
More...

This is the reality:

CME doesn't gap at ALL.
CME Group is an Inc.

Also, CME has about one million futures. You have to be specific about which CME futures you are talking about.



CME's bitcoin futures does gap occasionally, especially during the start of the week.
The gap could be very small, or quite small.




According to Max's video (click for more info), when there is a gap, the market might
continue to move in the gap direction,
close the gap,
remain still, or
the market might move in various combinations / permutations of the above.

Good Luck watching those videos.
 
Above, I thought it was clear. I'm referring to bitcoin futures as listed on the CME. The term "CME gap" is practically a meme in how prevalent it is. I didn't coin the term, and if you haven't heard it yet, I'm sure you will before much longer; it's that widespread.

Are we quibbling over semantics here? I'm interested in the mechanics of this gap closing process.

I personally don't believe futures traders are responsible for closing gaps between Friday close and Monday open. It's standard issue market forces, playing out primarily in the spot market, that move the market such as to close gaps, not someone trying to rebalance books.
 
stevenpaul said:
Above, I thought it was clear. I'm referring to bitcoin futures as listed on the CME. The term "CME gap" is practically a meme in how prevalent it is. I didn't coin the term, and if you haven't heard it yet, I'm sure you will before much longer; it's that widespread.
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Don´t play the gap closing "rule" in ($hit)Bitcoin Futures. There are many crypto
a$$holes running quantitative derivatives strategies in crypto markets - using the naivety of "quasi professionals" in the very same markets.

Common strategy of crypto criminals is to liquidate derivatives/futures traders and "re-invest" the liquidation monies back into the spot market - thus enforcing "bull runs".

There are a handful of crypto MMs coordinating these bull runs.

Follow https://www.coinglass.com/pro/futures/LiquidationMap to learn about stop loss price areas or "liquidation areas".

The regulators should have forbidden long time ago ANY derivatives products for crypto. But hey, CME & Co have sold their a$$ess for that little more revenue crypto creates.
 
Nighthawk said:
Don´t play the gap closing "rule" in ($hit)Bitcoin Futures. There are many crypto
a$$holes running quantitative derivatives strategies in crypto markets - using the naivety of "quasi professionals" in the very same markets.

Common strategy of crypto criminals is to liquidate derivatives/futures traders and "re-invest" the liquidation monies back into the spot market - thus enforcing "bull runs".

There are a handful of crypto MMs coordinating these bull runs.

Follow https://www.coinglass.com/pro/futures/LiquidationMap to learn about stop loss price areas or "liquidation areas".

The regulators should have forbidden long time ago ANY derivatives products for crypto. But hey, CME & Co have sold their a$$ess for that little more revenue crypto creates.
More...
This. It is the real Cryto gold rush. Not the actual crypto for retail, but bringing all the tools well used in other markets, to this new one, where the majority of players think they know how the game is played, and trouncing them over and over and over.

Like taking candy from a baby. They got decades of experience and well honed toolkits to do it.

It is like Social influences. They think they are making a killing, but the real big dollars are made creating the platform and algos, and then letting the digital serfs live, breath, and be slaves within it. It is about as close to "brains in a vat" aka The Matrix, as you can get today.
 
Yes there is a CME futures gap. But it would help if you mentioned Bitcoin in the title reference.

Anyway institutional (hedge and pension funds etc) money move markets. All markets they have a presents in. Ignore them at your own peril.
 
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