• Home
  • Markets
  • Changing of the Guard: CME Poised to Overtake Binance as Premier Bitcoin Futures Exchange

Changing of the Guard: CME Poised to Overtake Binance as Premier Bitcoin Futures Exchange

Oct 31, 2023 at 07:21 am

The regulated Chicago Mercantile Exchange (CME) is making remarkable advances in the realm of the most extensive bitcoin (BTC) futures and perpetual futures platforms, reminiscent of the early stages of the bullish trend observed in 2020-21.

CME has accumulated a substantial theoretical open interest (OI) of $3.54 billion, propelling its status to the second-largest bitcoin futures exchange. This signifies a notable progression from its preceding position several weeks ago when it occupied the fourth place. The theoretical open interest encompasses the valuation in U.S. dollars within the total of ongoing or uncompleted agreements.

In the meantime, the leading rank is preserved by the unregulated overseas platform, Binance, displaying an open interest of $3.83 billion, surpassing CME by 8%.

The open interest in CME’s cash-settled futures contracts recently exceeded the 100,000 BTC milestone for the first time in recorded history. Likewise, CME's portion of the BTC futures market surged to an unprecedented all-time high of 25%.

CME's typical bitcoin futures contract represents 5 BTC, whereas the micro contract is sized at one-tenth of 1 BTC. The usual ether futures come with a contract size of 50 ETH, while micro futures equate to one-tenth of 1 ETH. The majority of open interest on foreign exchanges is predominantly concentrated in perpetual futures rather than traditional futures contracts. Perpetuals are futures devoid of an expiration date and utilize the funding rate mechanism to maintain perpetuals in harmony with the spot price.

According to some analysts, CME's rise is an indicator of an institutionally driven market rally. Bitcoin has experienced a 27% increase in value this month amidst ongoing macroeconomic uncertainty and optimism surrounding spot ETFs.

Retail investors have also played a substantial role, as evidenced by the surge in futures-based ETFs. The rolling five-day volume for the leading bitcoin futures ETF from ProShares skyrocketed by an impressive 420% to $340 million last week, according to data supplied by Matrixport. This ProShares ETF primarily invests in CME's bitcoin futures.

In contrast, André Dragosch, the Research Head at Deutsche Digital Assets, puts forth a different viewpoint. Dragosch proposes that the ascent of CME is attributed to the reversal of pessimistic wagers on international exchanges.

He stated, "While CME's portion of $BTC futures Open Interest may have risen compared to other exchanges, the overall volume of $BTC futures and perpetuals Open Interest has not expanded in Bitcoin metrics. This implies that extended futures positions were not the primary impetus steering the recent surge," during an interview on X.

Read more: Bitcoin's 'Anti-Gravity' Surge Approaches the ETF Approval Finish Line



Read more about

Related News

Sign up for daily crypto news in your inbox

Get crypto analysis, news and updates right to your inbox! Sign up here so you don't miss a single newsletter.