Bitcoin, now trading on global markets from local face-to-face trades to the world’s largest futures exchanges, has to contend with the reality of catering to both a retail and institutional crowd. But the two market participant groups show completely different characters despite Bitcoin markets seemingly showing similar trends in trading volumes, open interest, price differences, and spreads.

While the term ‘institutional investors’ can cast a wide net, there is a straightforward metric that separates it from retail demand – regulated exchanges.

In this research, ZUBR delves into the two camps’ attitudes during times of high volatility and regular trading. Data analysis shows very critical differences in the trading personas.

Key Takeaways:

• Bitcoin futures trading volumes hit over $4 trillion in the past year. However, most notably is the growth coming from institutional investors on CME and Bakkt, the only two venues that saw an increase in trading volume after May’s all-time-high.
• Open-Interest on CME and other regulated exchanges has remained consistently higher in comparison to their traded volumes. This indicates that traders on these venues are increasingly looking at the long-term outlook and aren’t very easily swayed by large increases or decreases in price.
• Correlation of traded volume (in terms of daily percentage change) is very similar on unregulated exchanges; however, they differ significantly for regulated Bitcoin products. This again confirms a long-term bias from institutional investors. Institutional traders, with a focus on regulated exchanges like CME and Bakkt, tend to demonstrate greater market resilience, reacting less impulsively to short-term market fluctuations. Their positions often reflect a long-term strategy that is less influenced by volatility, unlike their retail counterparts on unregulated exchanges.
• Physical delivery of Bitcoin is becoming more and more critical as Bakkt traders shift their focus from cash-settled to preferring the actual underlying asset. This shift shows a strong institutional demand for the actual asset, rather than just financial speculation, signaling growing confidence in Bitcoin’s value as a tangible commodity.

Cryptocurrency market participants and commentators have always gauged interest and sentiment on the back of exchange-traded volumes. It is a metric used time and time again within the cryptocurrency sphere. Milestones are always touted as success and a badge of honor held by market participants.

Indeed, the numbers are impressive. At the end of August, Bitcoin futures trading volumes broke past the $3 trillion mark for this year alone. One-year trading volumes breached the $4 trillion mark from September 2019 up until mid-September 2020. Average monthly volumes hit $378bn in 2020, nearly 60% higher than the previous quarter average of 2019.

And while fake volumes have previously been a critical problem within the industry, trading volumes, as well as other industry metrics, are now very much linear looking from the top. Trading volume ebbs and flows have moved together across exchanges (see chart 1). Prices now are rarely far from each other.

Such a visible correlation for Bitcoin, which may be considered to be one of the most decentralized assets attracting retail and institutions, is indeed a sign of healthy and market maturation. Without a doubt, this is a long way to have come from what could be seen before Bitcoin catapulted onto the world stage in 2017.

And yet, there are observable differences when drilling further down into the data in how Bitcoin is being traded and by whom.

1: Monthly Bitcoin Futures Trading Volumes (Source: Skew)

The expansion of Bitcoin derivatives has given market participants the ability to gauge sentiment and price discovery better. A key metric in futures is the ability to assess market flows by looking at changes in open-interest.

Both metrics, trading volumes, and open-interest for futures are used as key indicators to assist market participants in assessing whether or not a bull or bear run is either strong or weak (see table above). These are the primary data points used by traders to build their strategies better.

However, market participants are wide-ranging on cryptocurrency exchanges. There are spot markets, futures, options, over-the-counter trusts, and physical trading. Some exchanges cater to specific regions more than others. Some exchanges are regulated, and the majority who are unregulated. Then there are institutional pedigree derivatives such as futures seen on the Chicago Mercantile Exchange (CME) and cash or physically-settled Bitcoin futures from Bakkt. There are retail traders and larger whales.

And data shows they all have different trading characters.

Open-interest to volume ratios on regulated exchanges, and Deribit (who up until the start of the year was under a Dutch jurisdiction attracting a higher pedigree of traders), shows that on the average, there is more open-interest on the exchanges than there is trading volume at any point in time (see chart 2). On the complete other side of the spectrum is Binance, whose open-interest to volume ratio shows that traders on the platform close their positions much faster by a wide scale.

The data also shows that in 2020, the ratio has indeed increased (i.e. more open-interest compared to trading volume) on regulated exchanges while retail-geared cryptocurrency trading venues have remained relatively flat year-on-year.

2: Open Interest / Volume Ratio During 2020 vs 2019

Such a trend is further cemented when looking at the ratio during bull and bear markets. In 2020, institutional traders and those on regulated exchanges have had a smaller turnover in comparison to their open-interest. In fact, CME traders lead the pack keeping their positions open (see chart 3). And the bear market seen this year didn’t deviate much further from the attitude for institutional and hedge traders in comparison to other unregulated exchanges (see chart 4).

‘Black Thursday’ was also indicative of the ethos. Bakkt and CME both had the highest levels of open-interest in comparison to traded volume (see chart 5).

3: Open Interest / Volume Ratio During Bull Markets
During bull markets, institutional traders tend to maintain their positions longer, focusing on gradual gains rather than short-term profits. This long-term perspective is reflected in the steadily increasing open-interest on regulated platforms like CME, even as prices rise.

4: Open Interest / Volume Ratio During Bear Markets
Conversely, during bear markets, institutional investors on regulated exchanges display less panic, keeping their open-interest relatively high, suggesting confidence in eventual market recovery. This contrasts sharply with retail investors, who are more likely to exit positions during periods of downturn.

5: Open Interest / Volume Ratio During ‘Black Thursday’ (2020-03-12)
On ‘Black Thursday,’ despite the dramatic price drop, institutional traders demonstrated their resilience by maintaining high open-interest levels, especially on regulated platforms like CME and Bakkt. This was a clear indication that these investors were less influenced by short-term market shocks compared to retail traders.

6: Trading Volume % Change 30-Day Rolling Correlation with Binance
The correlation in trading volume % change between Binance and BitMEX highlights the similarities between unregulated platforms. Both exchanges saw closely linked volume patterns, indicating that retail traders tend to react similarly to market shifts. However, institutional venues like CME showed significantly less correlation, reflecting their differing market strategies.

7: Trading Volume % Change Correlation with Binance
When comparing Binance with Huobi, another retail-focused platform, the trading volume changes were almost identical, underscoring the consistent behavior of retail traders across unregulated markets. In contrast, institutional platforms maintained a divergent trend, emphasizing their more strategic, long-term trading approaches.

8: Open-Interest % Change Correlation with Binance
The open-interest % change correlation between Binance and CME shows the largest divergence, with Binance traders rapidly closing positions while CME traders maintained theirs. This reveals the difference in market sentiment between retail and institutional investors, with the latter favoring sustained exposure over reactive trading.

9: Open-Interest % Change Correlation with Binance During Bull Market
During bull markets, Binance and other retail platforms saw more frequent position closures, while CME traders displayed more restraint. This highlights how institutional investors often let positions ride during uptrends, capitalizing on long-term market growth, unlike retail traders who seek faster, short-term profits.

10: Open-Interest % Change Correlation with Binance During Bear Market

As far as dollar figures go for traded volume, the unregulated retail-geared exchanges remain to lead markets. However, month-on-month growth figures tell an essential story. CME only trails behind Binance for average growth for 2020 (see chart 11). Bakkt isn’t far behind either. And while May saw the largest traded volumes happen in Bitcoin futures ever, only CME and Bakkt have seen growth since then (see chart 12).

11: Average 2020 Monthly Growth for Traded Volume (%)
In terms of monthly growth, Binance remains the leader, with CME closely trailing. Despite Binance’s dominance in absolute volumes, CME’s steady growth highlights increasing institutional participation, with Bakkt following closely behind as demand for physically delivered Bitcoin rises.

12: Traded Volume Growth May vs August 2020 (%)
While May was a record-breaking month for Bitcoin futures trading, it’s noteworthy that only CME and Bakkt saw continued growth from May to August. This indicates a sustained institutional interest in these platforms, contrasting with a slowdown in retail-driven exchanges.

The writings might not be on the wall yet for full-scale institutional interest. But there is a clear long-term interest in the cryptocurrency on regulated exchanges that has not been seen before. And the open-interest to volume ratio is quite telling of this fact.

And with the trading characteristics of each exchange varying from one to another, Bitcoin might continue to see further interest on regulated exchanges as more hedge funds and participants come in. A key component of Bitcoin, however, is the physical delivery of a scarce asset, unlike CME’s cash-settled futures.

Bakkt has taken on such a challenge and is proving to be a competitive knock-out. While at the start of the year, cash-settled futures accounted for more than half of Bakkt’s total traded volume, August closed off with physical Bitcoin delivery accounting for a whopping 72%.

What is clear is that regulated exchanges have attracted a different caliber of traders to the market, potentially shifting the future dynamic of the cryptocurrency into what believers have wanted all along – to displace gold.

Institutional investors’ increasing presence in the Bitcoin futures market signals a significant shift in the asset’s maturity and long-term appeal. As more institutional players participate through regulated platforms like CME and Bakkt, their preference for physical delivery and sustained open-interest highlights a move away from speculative trading toward strategic, value-driven investments. This evolution is a pivotal step in Bitcoin’s trajectory toward becoming a widely recognized store of value, further narrowing the gap between the cryptocurrency and traditional assets like gold. As institutional interest continues to rise, Bitcoin’s role in global financial markets may soon solidify.