Surging to a notional open interest of $3.54 billion, CME now holds the title of the second-largest bitcoin futures exchange. As standard bitcoin and perpetual futures trading gains traction, CME’s impressive rise has caught the attention of market analysts, leading to divided opinions on whether this surge can be attributed to heightened institutional interest.
Positioning in the Futures Market
The Chicago Mercantile Exchange (CME), a regulated entity, is making significant strides as one of the premier bitcoin (BTC) futures and perpetual futures exchanges based on open interest. This upward trajectory mirrors the early dynamics observed during the 2020-21 bullish cycle.
Coinglass data reveals that, with a notional open interest (OI) valued at $3.54 billion, CME has ascended to the rank of the second-largest bitcoin futures exchange, a considerable leap from its fourth position just a few weeks prior. Notional open interest is the metric representing the U.S. dollar value of the currently open or active contracts.
Binance Remains on Top
Retaining the pole position is Binance, the offshore unregulated exchange, boasting an open interest of $3.83 billion — a lead of 8% over the CME.
Recently, open interest in CME’s cash-settled futures contracts soared past the milestone of 100,000 BTC. In tandem, CME’s market share in BTC futures surged to an all-time peak, capturing 25% of the market.
Diving into the specifics, CME’s standard bitcoin futures contract corresponds to 5 BTC, while its micro contract is pegged at one-tenth of a BTC. The standard ether futures represent 50 ETH, and the micro futures equate to one-tenth of 1 ETH.
Offshore exchanges predominantly see their open interest gravitating towards perpetual futures over traditional ones. These perpetuals, futures with no expiration date, utilize a funding rate method to align with the spot market price.
Interpreting CME’s Climb
For several market observers, CME’s rise in the bitcoin futures space signals the momentum of institutional players. Amidst the backdrop of ongoing macroeconomic uncertainties and the promise of spot ETFs, Bitcoin has witnessed a growth spurt of 27% this month.
Retail investors have also made their presence felt. The shift is evident in the boom of futures-based ETFs. Specifically, the rolling five-day trading volume of the market-leading ProShares’ bitcoin futures ETF catapulted by an impressive 420%, reaching $340 million in the past week, as per Matrixport statistics. It’s notable that the ProShares ETF places its investments primarily in CME bitcoin futures.
However, offering a contrasting view is André Dragosch, the research lead at Deutsche Digital Assets. According to Dragosch, the growth in CME’s rank stems from the liquidation of bearish stances on offshore platforms.
While discussing the topic on platform X, Dragosch remarked, “CME’s proportion in $BTC futures OI might have escalated in comparison to other platforms; however, the overall volume of BTC futures & perps OI hasn’t surged when measured in BTC. This indicates that the rise isn’t predominantly backed by long futures positions.”
Continuing his analysis, Dragosch highlighted that the “price uptick was largely spurred by a short squeeze, paralleled by a decline in aggregate open interest.”
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