In a noteworthy development, the regulated Chicago Mercantile Exchange (CME) is steadily advancing through the ranks of the largest Bitcoin (BTC) futures and perpetual futures exchanges, drawing parallels to the early stages of the 2020-21 cryptocurrency bull run.
CME currently boasts a notional open interest (OI) of $3.54 billion, propelling it to the second spot on the list of Bitcoin futures exchanges, a significant rise from its previous fourth-place ranking, as reported by Coinglass. Notional open interest reflects the total U.S. dollar value locked in active or open contracts.
Claiming the top position is the offshore, unregulated exchange Binance, boasting an open interest of $3.83 billion, 8% higher than CME’s figure.
CME’s cash-settled futures contracts recently broke new ground by surpassing the 100,000 BTC mark for the first time on record. Furthermore, CME’s share in the BTC futures market has reached an all-time high of 25%.
CME offers standard Bitcoin futures contracts equivalent to 5 BTC, with micro contracts sized at one-tenth of 1 BTC. Similarly, the standard ether futures contracts have a size of 50 ETH, while micro futures equate to one-tenth of 1 ETH. Notably, most open interest in offshore exchanges is concentrated in perpetual futures, which differ from traditional futures by having no expiry date and employing the funding rate mechanism to stay aligned with the spot price.
Many experts believe that CME’s ascent is indicative of an institutional-driven rally. Bitcoin has surged by 27% this month, underpinned by ongoing macroeconomic uncertainties and optimism regarding spot ETFs.
Retail investors have also played a pivotal role in this surge, exemplified by the increase in futures-based ETFs. ProShares’ leading Bitcoin futures ETF has witnessed a remarkable 420% surge in its rolling five-day volume to reach $340 million last week. Notably, this ETF invests in CME’s Bitcoin futures.
However, André Dragosch, the Head of Research at Deutsche Digital Assets, offers an alternative perspective. Dragosch posits that CME’s rise stems from the unwinding of bearish positions on offshore exchanges. He asserts that while CME’s share in BTC futures OI may have increased in comparison to other exchanges, the overall amount of BTC futures and perpetuals OI has not experienced a significant rise in BTC terms. This suggests that long futures positions were not the primary driving force behind the recent surge, according to Dragosch.
