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21 Nov 2022

Futures relevancy recovering

CME’s open interest has surged to a new all-time high in notional terms of 98,725 BTC, surpassing October 25, 2021, highs of 93,628 BTC.
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Source: Skew, CME Group
All-time high open interest on CME
CME’s open interest has surged to a new all-time high in notional terms of 98,725 BTC, surpassing October 25, 2021, highs of 93,628 BTC. The growth coincides with a growing presence from direct market participants, representing 56% of the open interest, up from 39% on November 3. The growth also coincides with bearish positioning.Per last week’s CFTC commitment of traders report, commercial traders reduced long exposure and increased short exposure, suggesting that hedging-related trades constitute a substantial share of the most recent flows. This is unsurprising, given the contagion and uncertainty within crypto at the moment. Meanwhile, institutional speculators increased their long exposure. This may be driven by hedge funds seeking to take advantage of the CME discount versus spot ahead of the settlement of the November contract this Friday.
Futures dominance growing
CME’s growing market share has led futures to gain market dominance in BTC derivatives. However, the futures market share was unusually low, sitting at 25% on October 6, and has now returned to levels on par with the norm from 2022, currently representing 33% of the open interest in BTC derivatives.
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Source: Skew, CME Group, Laevitas
Overall open interest stays high. Open interest has fallen substantially in perps but remains at levels higher than prior to Q3 2022.
CME and OKX dominance growing
CME dominates the BTC futures market, accounting for 56% of the market. This is the highest CME dominance within BTC futures seen in the last year.
Futuresdominance
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Source: Skew, CME Group, Laevitas
However, when including open interest from perps, Binance’s dominance in the market is clear, representing a third of the open interest in BTC derivatives, whereas CME is the third largest derivatives exchange, representing 19% of the total OI in BTC derivatives. OKX is the largest offshore futures venue, representing 25% of the futures OI. OKX also has a material market share in perps, accounting for 20% of the total perp OI. OKX faced a wave of difficulties in 2021 related to Chinese crypto bans, leading its market share to plunge to 5% by December 31, 2021. Amidst recent turmoil, OKX has managed to reclaim its relevancy, once again being one of the most relevant derivatives exchanges in crypto, representing 22% of the total open interest in the market.
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