The Chicago Mercantile Exchange (CME) has surpassed Binance as the largest Bitcoin (BTC) futures exchange, marking the first time in two years that CME has claimed the top spot. This shift indicates a notable surge in demand from institutional traders. According to data from CoinGlass, CME now holds the leading position in futures and perpetual futures exchanges, with an open interest of approximately $4.07 billion, representing a 4% increase in the past 24 hours and a significant 24.7% market share. In contrast, Binance’s open interest stood at $3.8 billion, experiencing a decline of 7.8% during the same period.
How Did CME Dethrone Binance?
The reshuffling of rankings between the Chicago Mercantile Exchange (CME) and Binance as the largest Bitcoin futures exchange occurred amid a significant leverage flush out in the crypto market driven by wild price swings. This volatility led to a $2 billion drop in aggregate Bitcoin open interest, which had previously reached $12 billion. The decline had a more pronounced impact on Binance traders compared to participants in the CME market. The market witnessed Bitcoin surging to an 18-month high of nearly $38,000, followed by a sharp retracement toward $36,000 after BlackRock registered the iShares Ethereum Trust in Delaware, a pattern similar to BlackRock’s filing for a spot BTC exchange-traded fund (ETF) in June.
CME’s Growing Market Share Indicates Increasing Institutional Interest
CME’s gradual ascent to the top position in Bitcoin futures throughout the year highlights the increasing demand from institutional market participants looking to trade the largest and most established cryptocurrency. A research paper by Bitwise Asset Management in 2020 demonstrated that the CME Bitcoin futures market consistently leads the spot market in a statistically significant manner. David Lawant, the head of research at trading platform FalconX, pointed out that CME has been steadily gaining market share throughout 2023, with these gains intensifying recently due to heightened excitement surrounding Bitcoin spot ETF applications. This dominance among large traditional financial institutions indicates significant interest from this audience in the cryptocurrency space.
CME’s rapid ascent from the fourth position to become the second-largest Bitcoin futures exchange just 10 days ago is noted. André Dragosch, head of research at Deutsche Digital Assets, highlighted that CME’s rise is attributed to unwinding bearish positions on offshore exchanges rather than being driven by long futures positions. According to Dragosch, while CME’s share in Bitcoin futures open interest (OI) may have increased relative to other exchanges, the overall amount of Bitcoin futures and perpetuals OI has not seen a significant increase in Bitcoin terms. This suggests that the recent price surge was likely induced by a short squeeze and a reduction in aggregate open interest.
