CME Bitcoin futures surpass Binance for the first time a milestone moment for the crypto market

CME Bitcoin Futures Overtake Binance in a Milestone Moment for the Crypto Market

Author: Blofin Academy; Translator: Jordan, LianGuaiNews

On the evening of November 9th, Bitcoin rebounded strongly, breaking through the $35,000 resistance level and briefly hitting a high of $38,000, with the total market value of cryptocurrencies surpassing $1.4 trillion.

In comparison, the news of the Chicago Mercantile Exchange (CME) Bitcoin futures open interest reaching 108,900 BTC (approximately $4.02 billion) and surpassing Binance seemed to not attract much attention. However, for the cryptocurrency industry, this can definitely be considered a significant milestone moment.

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(Image source: Coinglass)

In the early stages of cryptocurrency development, the connection between Bitcoin and the global macroeconomy was not very close. However, over time, as the largest decentralized network worldwide, Bitcoin has been increasingly widely used, and its price trend has gradually aligned with global economic trends. The following graph shows the year-on-year growth rate of Bitcoin and global M2 money supply from 2014 to 2023:

In fact, Bitcoin combines many advantages of gold and forex, such as:

1. As a liquidity network covering the entire world, BTC offers relatively easy liquidity transfer;

2. BTC price trends can fully reflect changes in global liquidity levels in a timely manner;

3. BTC can serve as a short-term safe haven, acting as a temporary “liquidity channel” and “safe harbor” for risk capital;

4. BTC trading is more decentralized than forex trading and is less susceptible to regulation and central bank policies.

On the other hand, starting from the fourth quarter of 2022, the correlation between Bitcoin and gold, NASDAQ, and the US dollar has gradually decreased (as shown in the graph below). To some extent, this means that Bitcoin is more conducive to diversifying the overall risk of investment portfolios and reducing volatility.

For these reasons, institutional investment preferences for exposure to Bitcoin have been continuously rising since 2021. According to statistical data disclosed by VettaFi, a financial index analysis institution, as of November 2023, the ProShares Bitcoin Strategy ETF (BITO) has become the most actively traded global forex ETF, with significantly higher average trading volume than gold ETFs.

In addition, looking at the indicators of open interest (OI) and trading volume of futures contracts, the demand from institutional traders for exposure to Bitcoin (BTC) continues to increase. Since January 2018, the open interest in Bitcoin futures on the CME has risen by over 100,000 standard contracts (note: each standard contract represents 1 BTC).

Not only that, the daily trading volume of cryptocurrency futures on the CME is now comparable to many mainstream futures products, as shown in the table below:

Surpassing Binance indicates that the CME now has the largest share of the BTC Delta 1 market, and it also means that the connection between cryptocurrencies and other markets has become even tighter. Once the listing of spot ETFs is approved as planned, it is expected to attract more traditional institutions to increase their exposure to cryptocurrencies. This will further enhance the position of the CME in the global cryptocurrency market.

Of course, traditional institutions may prefer to view the crypto market from a global macro perspective, and their entry into the market will bring global macro narratives into the crypto market. This is very different from the perspective of cryptocurrency natives. Therefore, for investors, if they continue to analyze the crypto market using old frameworks, it may no longer be effective. In the future, it will be necessary to introduce new analytical frameworks that are cross-asset and cross-market.

In conclusion, the “Wild West era” of cryptocurrencies is coming to an end, and the “crypto macro era” that is becoming increasingly connected to the global economy is just beginning.

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