This
post
is
part
of
Consensus
Magazine’s
Trading
Week,
sponsored
by
CME.
CME
Group
is
now
the
place
to
trade
bitcoin
futures,
apparently.
For
the
first
time
in
months,
if
not
years,
CME
is
now
seeing
more
BTC
futures
trading
than
on
the
world’s
largest
cryptocurrency
exchange,
Binance.
This
flippening,
which
has
happened
before,
but
doesn’t
happen
often,
is
often
seen
as
a
sign
of
increasing
institutional
interest
in
crypto.
CME,
which
incidentally
but
(please
believe
me)
unrelatedly
is
the
sponsor
this
week
for
The
Node
newsletter,
is
often
seen
as
The
Exchange
for
Grownups.
Whereas,
with
Binance
and
co.,
I
think
very
few
people
are
putting
on
ties
to
go
to
work
to
trade
bitcoin
perps
on
a
native
crypto
exchange.
See
also:
Ethereum
Futures
Are
Now
Trading
on
CME
Don’t
just
take
my
word
for
it,
CoinDesk’s
markets
guru
Omkar
Godbole
said
CME
is
“considered
a
proxy
for
institutional
activity”
in
crypto,
on
CoinDesk
TV’s
“First
Mover.”
“What
we
are
seeing
right
now
is
a
good
old
pump
of
open
interest
on
the
CME
futures,”
he
said.
Open
interest
refers
to
the
dollar
value
of
existing
futures
contracts.
Perhaps
this
interest
is
being
driven
by
bitcoin’s
price,
which
has
rallied
over
100%
year-to-date,
and
institutions
want
a
little
bit
of
the
action.
Or,
it’s
because
they
are
taking
bets
that
the
narratives
around
a
potential
spot
bitcoin
exchange-traded
fund
(ETF)
being
listed
by
year’s
end
or
the
Bitcoin
halving
on
the
docket
for
next
year
will
spur
even
more
buying.
Futures
are
a
type
of
derivatives
contract
that
requires
buyers
to
purchase
bitcoin
at
a
predetermined
price
at
a
later
date.
They’re
essentially
a
hedge
against
a
future
price
movement,
and
are
commonly
used
to
bet
that
you
can
buy
an
asset
today
for
less
you
could
at
a
later
date.
And
lot’s
of
people
seem
to
think
bitcoin
has
legs
to
run,
yet.
Bitwise
Chief
Investment
Officer
Matt
Hougan
essentially
said
that
all
the
bitcoin
ETF
hype
is
not
fully
“priced
in”
yet.
To
be
sure,
the
chief
investment
officer
of
a
crypto
investment
company
has
many
incentives
to
believe
something
like
that
and
drum
up
support
for
that
thesis.
It’s
also
a
kettle-of-worms
getting
into
the
question
of
whether
the
Bitcoin
halving
is
priced
in,
especially
at
this
point,
when
it
is
still
six
months
away.
There’s
certainly
something
reasonable
about
the
idea
that
the
fewer
new
bitcoins
released
into
circulation
(as
part
of
the
“mining
subsidy,
which
is
halved
programmatically
every
four
years
—
hence
“the
halvening”)
will
be
good
for
bitcoin’s
price.
It’s
the
same
theory
of
supply
and
demand
behind
the
idea
that
bitcoins,
capped
at
21
million
coins,
are
scarce
and
therefore
valuable.
But,
if
you
believe
in
efficient
markets,
then
you’d
have
to
think
a
pre-scheduled
event
that
99.9%
of
all
bitcoin
holders
know
about
and
eagerly
await
would
have
to
be
“priced
in.”
Then
again,
it’s
hard
to
say
crypto
markets
are
efficient.
And
the
same
guys
who
thought
up
the
Efficient
Markets
theory
also
said
it’s
impossible
to
find
a
$10
bill
on
the
street,
because,
if
it
was
there,
it’d
already
be
pocketed
by
someone.
Yet
I
find
(and
lose)
money
all
the
time,
and
crypto
traders
sometimes
make
money
off
of
market
inefficiencies.
Anyway,
to
make
things
even
more
complicated,
Godbole
said
that
typically
when
open
interest
in
bitcoin
futures
is
growing
on
CME,
it’s
an
indicator
that
bitcoin’s
price
is
about
to
drop.
This
isn’t
a
hard-and-fast
rule,
but
has
been
an
observable
trend
following
the
few
times
when
CME
flippened
Binance.
“Both
times,
CME’s
move
to
the
top
spot
marked
price
top,”
he
said.
What’s
more,
while
CME’s
open
interest
have
grown
the
flippening
this
time
around
may
have
multiple
factors.
First,
Binance’s
market
share
of
futures
contracts
compared
to
the
CME
has
been
on
a
long-term
decline,
perhaps
due
to
the
exchange’s
legal
troubles
in
the
U.S.
and
E.U.
And
lastly,
there’s
also
a
difference
between
the
types
of
derivatives
traded
on
CME,
where
a
few
traders
took
out
bullish
bets,
and
on
Binance,
which
actually
had
a
high
amount
of
open
shorts
(bearish
bets
on
BTC’s
price)
that
were
liquidated
during
the
recent
price
rally,
Godbole
said.
“So,
while
we’re
seeing
a
spike
in
CME
contracts,
that
doesn’t
necessarily
mean
that
the
futures
market
is
suddenly
exploding,”
he
said.
What
does
this
all
mean
for
bitcoin?
Are
the
institutions
here?
Will
the
price
continue
to
climb?
Dear
reader,
if
I
knew
I
wouldn’t
be
writing
about
it
—
I’d
be
gambling.
This
article
was
excerpted
from
The
Node
newsletter,
subscribe
here.
CORRECTION
(NOV.
10,
2023
–
22:40
UTC):
The
open
interest
in,
not
volumes
of,
CME’s
bitcoin
futures
has
surpassed
Binance.
Corrects
in
the
headline
and
throughout.
Also
reexplains
that
futures
contracts.