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

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.

This @Glassnode chart only highlights on-chain #Bitcoin trading activity, but it misses the big institutional action happening off-chain on the BTC futures markets.

CME BTC futures OI just touched 100k BTC ($3.4 Billion USD) with a 25% market share, rapidly approaching Binance… https://t.co/opZ7wJEOFg pic.twitter.com/SOj577riFz

— Leon Waidmann | On-Chain Insights???? (@LeonWaidmann) October 24, 2023

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.

This take doesn't make sense.

CME's share in $BTC futures OI might have increased relative to other exchanges but the aggregate amount of BTC futures & perps OI has not increased in BTC terms, implying that long futures positions were not the main driver behind the recent… https://t.co/9y6xAcmvzn pic.twitter.com/imHZNib4ls

— André Dragosch | Bitcoin & Macro ⚡ (@Andre_Dragosch) October 24, 2023

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