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CME launches Micro Bitcoin futures
CME launches Micro Bitcoin futures
Bitcoin

CME launches Micro Bitcoin futures

By Marco Cavicchioli - 4 May 2021

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The CME Group yesterday announced the launch of Micro Bitcoin futures

These are small bitcoin futures contracts, only 1/10th of a BTC in size, which are being made available primarily to small investors to provide them with precise exposure to the bitcoin market. 

CME was by far one of the first to launch bitcoin futures on the market, but they were always large contracts, with each one being 5 BTC. 

Contracts of this size are only suitable for large investors, not to mention the fact that the value of bitcoin has almost tripled since they were launched in late 2017

This size effectively prevented small investors from being able to use them, which is why CME Group decided to make the new contracts micro-sized, meaning they are fifty times smaller in size than their predecessors. 

Global Head of Equity Index and Alternative Investment Products at CME Group, Tim McCourt, said

“We are pleased to introduce this new contract at a time when we continue to see consistent growth of liquidity and participation in our crypto futures and options. At one-tenth the size of one bitcoin, Micro Bitcoin futures will provide an efficient, cost-effective way for a broad array of market participants – from institutions to sophisticated, active traders – to fine-tune their bitcoin exposure and enhance their trading strategies, all while retaining the benefits of CME Group’s standard bitcoin futures”.

How CME Micro Bitcoin futures work

The new smaller contracts will allow more clients to participate in the bitcoin market, and large institutional clients to more precisely manage their exposure to BTC. 

The CME’s new Micro Bitcoin futures are also cash-settled, like the previous ones, based on the CME CF Bitcoin Reference Rate which serves as a once-a-day reference rate for the US dollar price of BTC. 

The increase in the range of derivative products on the traditional financial markets to allow traders and investors to take positions on bitcoin makes it clear on the one hand that their interest is growing and on the other hand that financial institutions are increasingly ready to commit to expanding this new market. 

 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 25 thousand subscribers.

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