Crypto assets are capturing the attention of major financial players as they demonstrate positive movement, particularly this week. This shift is evident in the increasing Open Interest on one of the world’s largest exchanges, the Chicago Mercantile Exchange (CME), which has surpassed Binance in this key metric, taking the second spot in the process.
This trend has not gone unnoticed. The surge in Open Interest on CME is a clear indication of growing institutional involvement. Open Interest refers to the total number of outstanding derivative contracts that have yet to be settled. In the context of Bitcoin, this metric is a significant indicator of market sentiment, especially as institutional players enter the market in increasing numbers.
Historically, exchanges like BitMEX dominated the derivatives space. However, legal actions against its executives have led to a shift, with other exchanges, including OKEx, gaining ground. Currently, OKEx’s Open Interest is approaching $1 billion, a historical resistance level, while CME follows closely with nearly $800 million. The aggregated Open Interest across major exchanges has reached a monthly high of $5 billion, though Bakkt lags significantly with just $15 million.
While Binance still leads in 24-hour futures volumes with $4.75 billion, followed by Huobi and OKEx at $3.5 billion and $2.9 billion, respectively, the rise of CME reflects an institutional trend gaining traction.
Grayscale, a leading institutional crypto trust provider, has also seen significant growth in assets under management (AUM), now at $7.3 billion. The company’s Bitcoin trust alone is valued at $6 billion, a figure that has surged considerably in recent weeks. Grayscale’s third-quarter performance marked a record with over $720 million in Bitcoin inflows, signaling the increasing institutional appetite for digital assets.
Notable investors are also showing more interest in Bitcoin. Billionaire hedge fund manager Paul Tudor Jones III recently stated that he is more bullish on Bitcoin now than when he first added it to his portfolio in May. Veteran trader Peter Brandt attributes the current rally to growing institutional involvement in the market.
As of now, Bitcoin remains the dominant force in the crypto market, with the total market capitalization nearing $390 billion, a significant increase of over 110% since the beginning of the year. While the fourth quarter has traditionally been bearish for the past two years, 2020 appears to be following the 2017 pattern, with the year potentially ending on a bullish note.
