CME Overtakes Binance in Bitcoin Futures Open Interest Amid ETF Market Shifts
Summary:
Chicago Mercantile Exchange (CME) has surpassed Binance in terms of Bitcoin futures open interest, marking a shift in the crypto derivatives market. This development was noted by analysts after Bitcoin's value increased beyond $37,000 for the first time in 18 months. In addition, changes in the ETF market were highlighted, with CBOE refiling a Bitcoin spot ETF application following SEC feedback. Companies like Fidelity and BlackRock are also planning to launch Bitcoin ETF products. Furthermore, CBOE and Coinbase are expected to enter a surveillance-sharing agreement to counteract potential market manipulations.
In a series of unexpected events, the reign of Binance over Bitcoin futures open interest has been overthrown by Chicago Mercantile Exchange (CME), a giant in the traditional derivatives market. This surprising shift happened subsequent to Bitcoin surpassing $37,000, a landmark it hadn't reached in 1.5 years. This 'flippening' event, where CME outdid the worldwide crypto market Binance in Bitcoin futures open interest, was pointed out by several industry analysts.
For context, "open interest" is a term used to show the total number of unsettled contracts in futures and options trading. It denotes the active contracts traders hold at any specific time, and its rise or fall is decided by the disparity between the contracts held by buyers and those held by sellers.
Furthermore, James Seyffart, an ETF research specialist from Bloomberg Intelligence, made a point by questioning if CME's increasing dominance in Bitcoin futures open interest would help soothe the SEC's historical reservations concerning Bitcoin market depth and possible market manipulation. The SEC has historically been reluctant to approve various Bitcoin ETF applications, citing inadequacies such as the lack of sufficient data on the market from which the ETFs derive their value.
In light of these concerns, in July 2023, the Chicago Board Options Exchange (CBOE) revisited its Bitcoin spot ETF application following feedback from the SEC. Plans are in the pipeline for Fidelity to launch its own Bitcoin ETF product on CBOE, and the globally renowned asset manager, BlackRock, has announced plans for its own Bitcoin ETF to be listed on Nasdaq.
CBOE’s revised application explained its efforts to reinforce measures for identifying and countering fraudulent activities and market manipulation of shares in the planned Wise Origin Bitcoin Trust. Moreover, CBOE anticipates forming a surveillance-sharing agreement with Coinbase, which runs a US-based Bitcoin spot trading platform. The intent behind such an agreement is to enable comprehensive access to Coinbase's Bitcoin trading data, aiding in the detection and prevention of potential market manipulations.
Indicators from Kaiko Research data suggest that Coinbase accounted for approximately 50% of the daily trading volume of US dollar to Bitcoin in May 2023. This is a noteworthy development considering the SEC's doubts over the liquidity of Bitcoin markets to underpin ETF offerings. Speaking of the importance of a surveillance-sharing agreement, it provides a means for exchange platforms and regulators to ensure no market player is manipulating stock or share values.
Published At
11/10/2023 8:12:54 AM
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