The American company for global markets, Chicago Mercantile Exchange (CME Group), announced the launch of a new Bitcoin futures product on May 3, 2021, subject to US regulatory authorities approving the product. The new contract is a micro bitcoin futures product that represents 0.1 bitcoin, rather than CME’s other contract that is equal to five bitcoin. The smaller contract aims to make Bitcoin futures investments more accessible “to a wide range of customers”.
CME Group launches Micro Bitcoin futures contract
The well-known derivatives market CME Group has announced the launch of a new futures product that is smaller than the contract that represents five Bitcoin (BTC). The new product will be a micro-futures contract pending regulatory approval, offering exposure to 0.1 BTC. Essentially that’s a tenth the size of a bitcoin, and the company expects investors will be interested in the smaller product.
Tim McCourt, Global Head of Equity Index and Alternative Investment Products for CME Group, stated that CME has seen strong growth since launching BTC futures in 2017. “Since the start of our Bitcoin futures contract in 2017, we have seen steady and continuous growth in liquidity and market participation in our crypto derivatives, especially among institutional traders,” McCourt said during the announcement of Micro Bitcoin futures.
The managing director for alternative investment products also stated:
The introduction of micro bitcoin futures responds directly to the demand for smaller contracts from a wide range of clients and provides even more choice and precision in how participants can trade regulated bitcoin futures in a transparent and efficient manner with the CME Group.
Current CME derivatives of Bitcoin and Ethereum are seeing growth
In 2017, the discovery that CME Group and Cboe intended to join the Bitcoin economy drove the asset’s price up. However, the Chicago Board Options Exchange (Cboe) later discontinued Bitcoin futures. CME, on the other hand, outperformed global competition and became one of the world’s largest Bitcoin futures markets in November 2020. The following month, CME announced that the company would also offer Ethereum Futures (ETH) contracts.
As long as regulators agree, the micro bitcoin futures will already join the earlier BTC and ETH contracts CME is offering. According to the CME, contracts worth around 69,000 Bitcoin and 38,400 Ethers have been traded every day since the ETH product was launched. Just like the five BTC contract, the micro bitcoin futures product is related to the CME CF bitcoin reference rate and all settlement is in cash.
What do you think of CME’s launch of a micro bitcoin futures contract? Let us know what you think on this matter in the comments section below.
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