A juicy trade is helping push CME's bitcoin futures to new records, traders say

Quick Take

  • CME’s bitcoin futures market hit a record for open interest
  • On Monday, notional OI hit $948 million
  • Traders say that’s being fueled by basis trades 

CME's bitcoin futures market has been soaring towards $1 billion in notional open-interest, hitting an all-time high of $948 million during Monday's trade. 

Launched in 2017, CME's bitcoin futures contract has seen its open interest grow at a fast clip since the end of July. Indeed, the aggregate open interest across the largest bitcoin futures markets has been increasing steadily from around $2 billion in mid-March to nearly $6 billion at last check. 

Still, CME is unique given it is the largest derivatives market for U.S.-regulated trading shops and investors. Traders also say unique forces are driven open-interest to record highs. 

Joshua Lim, head of derivatives at Genesis Global Trading, told The Block that "the juiciness of the basis" is fueling open interest, referring to a trade that captures the spread between the underlying spot market and CME's bitcoin futures. 

"The futures are trading way above spot so people are selling it vs buying spot," said Lim. Genesis, which launched its derivatives desk in June, reported the desk saw $400 million worth of volume in its first month. 

A trading executive at another crypto trading firm said that the basis trade was "definitely driving some of it." The person added that the firm has seen a "general uptick in institutional interest around bitcoin."

Most of those firms are expressing their interest in CME futures before spot "based on the familiarity and ease of access."

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