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Analysis
31 Jul 2023

Exploring the derivatives market structure

Binance reigns as the largest exchange measured by open interest dominance, with Bybit and CME taking the second and third places.
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As the market reigns quiet, we take the opportunity to highlight the current structure of the bitcoin derivatives market. Binance reigns as the largest exchange measured by open interest dominance, with Bybit and CME taking the second and third places. The futures market has lost relevancy in offshore derivatives over the past few years, with its open interest being dwarfed by CME. CME represents a massive 78% of the open interest across traditional BTC futures, with an open interest equivalent to 83,000 BTC. OKX is the runner-up with an open interest of 8.8k BTC. Deribit sits in third with an OI of 6.6k BTC, largely caused by Deribit’s dominance in the options market, with its options being indexed based on Deribit futures prices.
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The reduced relevancy of traditional futures in crypto compared to perps is illustrated in the chart above. Currently, futures represents 25% of the total OI in BTC futures and perps. Within the offshore market in isolation (CME excluded), the total futures OI sits at 23.4k BTC or 7% of the offshore OI related to BTC futures and perps. A reason behind the declining dominance of expiry futures offshore may relate to the intuitive and simple leveraged exposure enabled by perps.
Binance top dog for nearly 2.5 years
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Binance currently holds 35% of the open interest in BTC futures and has been the leading exchange measured by open interest since early 2021. After FTX’s collapse, Binance’s derivatives dominance has been consolidated further, while also Bybit has seen a growing OI of late. OKX’s brief resurgence on the tail-end of 2022 has settled, and OKX now accounts for a modest 13% of the OI in the market. CME’s market dominance is far more erratic than the dominance of offshore venues and reacts in impulses often connected to major headlines. For instance, CME saw its market share increase briefly amidst the FTX collapse and two major bursts in 2023. The first 2023 burst coincided with BTC’s first breakout past $20,000; the second spike higher coincided with BlackRock’s ETF application announcement. This points towards a tendency from traditional funds to use BTC exposure as a short-term trade based on changing market dynamics.
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