The Chicago Mercantile Exchange has surpassed Binance in terms of trading Bitcoin futures. After long months, we got to see that CME has more bitcoin futures trading than the world’s largest cryptocurrency exchange, Binance.
Well, it is not so often, but it is a sign of institutional interest in crypto. CME, coincidentally the sponsor of this week's edition of The Node newsletter (though entirely unrelated, trust me), is frequently perceived as the Exchange for the Mature Investor.
On the other hand, when it comes to platforms like Binance, the notion of donning ties for trading Bitcoin perpetual contracts on a purely cryptocurrency exchange seems to be a rarity.
Binance CEO Changpeng Zhao has acknowledged the recent ascent of the Chicago Mercantile Exchange (CME) as the leading platform for Bitcoin futures trading.
In response to reports from Coinglass revealing that CME has claimed the top position for the first time in two years, Zhao sees this development as a noteworthy signal of U.S. institutions increasingly entering the crypto sphere. He raises questions about how other countries might respond to this notable shift.
According to Coinglass data, CME secured its top spot with an Open Interest (OI) of approximately $4.07 billion, marking a 4% surge within 24 hours. This propelled CME to a 24.7% market share. Meanwhile, Binance slipped into second position with an OI of $3.8 billion, experiencing a 7.8% drop.
CME stands out for catering to traditional institutions, leading to the perception that its ascent signifies a surge in institutional investors entering the Bitcoin market. The platform specializes in trading traditional futures contracts with predetermined expiration dates.
This sets it apart from the services provided by Binance and other exchanges, which encompass both traditional futures and perpetual contracts—futures without a set expiry date.
Perhaps the growing interest in Bitcoin is driven by its impressive 100% price rally this year. Institutions might be drawn to the action, looking to seize an opportunity.
Another reason could be the anticipation of significant events, like the possible listing of a spot Bitcoin exchange-traded fund (ETF) by the end of the year or the upcoming Bitcoin halving next year. Some investors are making bets that these events will lead to more buying.
Futures, a kind of contract, involve buyers agreeing to purchase Bitcoin at a set price on a future date. It's like a safeguard against potential price changes, often used to speculate that the asset's price will be higher in the future.
Many believe Bitcoin still has room to grow. Some, like Bitwise Chief Investment Officer Matt Hougan, argue that the excitement around a Bitcoin ETF isn't fully factored into the current market. Additionally, the upcoming Bitcoin halving, reducing the new supply of bitcoins, could impact its price positively, following the basic economic principle of supply and demand.