Basis trade unwind sees Binance overtaking CME

The CME has lost its place as the number one exchange for bitcoin BTC$89,127.04 futures open interest (OI). Binance has now overtaken CME as the largest venue by OI according to CoinGlass data, with Binance holding roughly 125,000 BTC ($11.2 billion in notional value) against the CME’s of 123,000 BTC ($11 billion).

CME OI started the year at 175,000 BTC, but that level has steadily fallen as the profitability of the basis trade — in which traders buy spot bitcoin while simultaneously selling futures to capture the price premium between the two markets — has declined.

Open interest on Binance, however, has remained steady throughout the year as it’s the exchange more likely to be favored by retail punters betting on directional price movements.
Just more than a year ago, CME OI reached a record 200,000 BTC as prices rallied toward $100,000 following President Trump’s election victory. At that time, the annualized basis rate surged to around 15%.

Today, the CME that basis rate has compressed to roughly 5%, according to Velo data, reflecting diminishing returns for institutional basis traders.

As spot and futures prices converge and market efficiency improves, arbitrage opportunities continue to shrink. CME had been the largest exchange for bitcoin futures OI since November 2023, driven by institutional positioning ahead of the launch of spot bitcoin ETFs in January 2024. That advantage, for the moment, appears to have faded.