Bitcoin derivatives trading is on the rise as institutional investors flood the market.
CME Group has become the world’s largest Bitcoin (BTC) futures market following a surge in open interest over the past month, industry data shows.
In a Friday tweet, Arcane Research announced that CME had overtaken OKEx as the world’s largest Bitcoin futures market. Citing data from Skew, a market intelligence firm, Arcane said open interest in CME’s Bitcoin futures contract has reached $1.16 billion. OKEx, meanwhile, registered $1.07 billion.
“Institutional investors are here,” Arcane said.
CME’s Bitcoin futures market has more than doubled over the past month, with more traders seeking exposure to the flagship cryptocurrency as it surged to near all-time highs. Futures trading can sometimes invoke heavy volatility, especially as expiry nears, as contract holders adjust their positions before that date.
Its November futures contract, BTCX20, expires on Friday.
Cryptocurrency exchanges Binance and Huobi have also emerged as major futures players. Based on open interest, they are the third- and fourth-largest BTC futures platforms, respectively.
Bybit, which also appeared on Arcane’s list, announced earlier this week that it will soon launch a quarterly Bitcoin futures contract.
The futures market is an important bellwether for Bitcoin adoption because it means traditional investors are getting into the mix. While the 2017 bull market was driven largely by retail traders, the current uptrend has been fueled by deeper institutional pockets.
CME, in particular, is becoming vital to Bitcoin price discovery, according to investment manager Wilshire Phoenix.
CME’s significance is “not only demonstrated through trading volume and open interest,” Wilshire said, “but also by influence on spot price formation.
Bitcoin price is currently consolidating in the $16,500 range following a heavy Thanksgiving day sell-off.