The regulated derivatives marketplace, Chicago Mercantile Exchange (CME), has recently overtaken Binance as the largest Bitcoin futures exchange, marking the first time in two years that CME has claimed the top spot. This shift in position highlights a surge in demand from institutional traders, indicating a growing interest in cryptocurrencies.
Rise to the Top
According to data from CoinGlass, CME now ranks first among futures and perpetual futures exchanges, boasting an impressive open interest (OI) of approximately $4.07 billion. This represents a 4% increase in the past 24 hours and captures a significant 24.7% market share. In contrast, Binance’s OI stood at $3.8 billion, experiencing a decline of 7.8% during the same period.
While CME offers trading in traditional futures contracts with predetermined expiry dates, Binance, along with other exchanges, provides both conventional futures and perpetual contracts with no expiry. This difference in offerings sets the two exchanges apart.
The Impact of Market Volatility
The reshuffling of rankings occurred amidst a major leverage flush out in the crypto market, driven by wild price swings. The volatility resulted in a $2 billion drop in aggregate Bitcoin open interest, which previously stood at $12 billion.
Bitcoin experienced a surge to an 18-month high of nearly $38,000, followed by a sharp retracement towards $36,000 after Blackrock registered the iShares Ethereum Trust in Delaware. This pattern mirrors a similar occurrence when BlackRock filed for a spot BTC exchange-traded fund (ETF) in June, highlighting the influence of institutional activity on the cryptocurrency market.
Institutional Demand for Bitcoin Futures
CME’s gradual ascent to the top position throughout this year underscores the growing demand from institutional market participants seeking to trade the largest and most established cryptocurrency. A research paper published by Bitwise Asset Management in 2020 revealed that the CME Bitcoin futures market consistently leads the spot market in a statistically significant manner.
“The CME has been steadily gaining market share throughout 2023, with these gains intensifying in recent weeks due to heightened market excitement surrounding BTC spot ETF applications.”
– David Lawant, Head of Research at FalconX
Lawant further emphasized that the CME’s dominance among large traditional financial institutions underscores the significant interest from this audience in the world of cryptocurrencies. The recent surge of CME from the fourth position to the second-largest Bitcoin futures exchange indicates its growing influence in the market.
It is worth noting that CME’s rise is attributed to unwinding bearish positions on offshore exchanges rather than being driven by long futures positions. This implies that the recent surge in prices was more likely induced by a short squeeze and a reduction in aggregate open interest.
