CME, Where Institutions Trade Bitcoin Futures, Flipped Binance. Is That as Bullish as It Sounds?

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 spotbitcoin exchangetraded 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 gives buyers the option to purchase bitcoin at a predetermined price at a later date. They’re essentially a bet that some asset’s price will go up, so you can buy an option to buy it for less today and pocket the difference.

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…