The shift marks the first time in two years that CME has claimed the top spot, indicating a surge in demand from institutional traders.
According to data from CoinGlass, CME now ranks first among futures and perpetual futures exchanges, boasting an open interest (OI) of approximately $4.07 billion.
This represents a 4% increase in the past 24 hours and captures a significant 24.7% market share.
In contrast, Binance’s OI stood at $3.8 billion, experiencing a decline of 7.8% during the same period.
While CME offers trading in traditional futures contracts with predetermined expiry dates, Binance, and other exchanges provide both conventional futures and perpetual contracts with no expiry.
How Did CME Dethrone Binance?
The reshuffling of rankings occurred amidst a major leverage flush out in the crypto market, driven by wild price swings.
The volatility resulted in a $2 billion drop in aggregate Bitcoin open interest, which previously stood at $12 billion.
Notably, the decline had a more pronounced impact on Binance traders compared to participants in the CME market.
Bitcoin experienced a surge to an 18-month high of nearly $38,000, followed by a sharp retracement towards $36,000, after Blackrock registered the iShares Ethereum Trust in Delaware.
Notably, there was a similar pattern when BlackRock filed 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 throughout this year underscores the growing demand from institutional market participants seeking to trade the largest and most established cryptocurrency.
A research paper published by Bitwise Asset Management in 2020 revealed 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, noted that the CME has been steadily gaining market share throughout 2023, with these gains intensifying in recent weeks due to heightened market excitement surrounding BTC spot ETF applications.
Lawant further emphasized that the CME’s dominance among large traditional financial institutions underscores the significant interest from this audience in the world of cryptocurrencies.
It is worth noting that CME surged from the fourth position to become the second-largest Bitcoin futures exchange just 10 days ago.
At the time, André Dragosch, head of research at Deutsche Digital Assets, said that CME’s rise is a result of unwinding bearish positions on offshore exchanges rather than being driven by long futures positions.
According to Dragosch, while CME’s share in BTC futures OI may have increased relative to other exchanges, the aggregate amount of BTC futures and perpetuals OI has not seen a significant increase in BTC terms.
This implies that the recent surge in prices was more likely induced by a short squeeze and a reduction in aggregate open interest.