Cash-margined bitcoin (BTC) futures contracts are more popular than ever.

Open interest in cash-margined futures hit an all-time high of 384,000 BTC ($25.5 billion) on Monday, surpassing the November 2022 peak of 376,000 BTC, when bitcoin traded near $16,000, according to data source Glassnode.

The CME futures accounted for 40% of the cash-margined tally on Monday. Glassnode's cash and crypto-margin charts include standard futures data (excluding perpetuals) from Binance, Bitfinex, BitMEX, Bybit, CME, Deribit, Huobi, Kraken and OKX.

Cash-margined open interest has been steadily increasing for the last two years, while open interest in crypto-margined has steadily declined from 210,000 BTC to 87,000 BTC, now accounting for just 18.2% of the total open interest of 478,000 BTC.

Glassnode defines crypto-margin as "the total amount of futures contracts open interest that is margined in the native coin (e.g., BTC) and not in USD or stablecoin." The firm defines cash-margin as "the total amount of futures contracts open interest that is margined in USD or USD-pegged stablecoins. Stablecoins include USDT and BUSD."

Open interest (OI) refers to the number of active or open futures contracts at a given time. An uptick in open interest is said to represent an inflow of money and preference for leveraged products. Open interest can be measured in native token terms and notional terms. The latter is influenced by the underlying asset's price and can be misleading.

In cash-margined contracts, the underlying collateral being used is stablecoins and/or dollars, which are more stable than tokens used as margin in the crypto-collaterized futures.

As such, cash-margined contracts are relatively less vulnerable to forced liquidations and breed less volatility. Ultimately, this could provide a more sustainable bull run moving into 2025.

The CME's leadership in cash-margined segment suggests increasing institutional activity in the derivatives market. Sophisticated investors might be using CME futures to hedge their directional plays or set up the market-neutral basis trade.

In October 2023, CME became the largest futures exchange for the first time, capturing over 30% of the market share and overtaking Binance. This increase was most likely driven by traders pricing the expected debut of the U.S.-based spot ETFs, which went live in January.