The CME has opened trading in bitcoin micro futures, equivalent to just one-tenth of the value of a BTC. The CME has opened trading in micro futures contracts on bitcoin, equivalent to just one tenth of the value of a BTC.
The bitcoin derivatives market
One of the most important trends in the financial market is the creation of derivatives on the most important assets. As soon as a financial asset starts to gain legitimacy in the eyes of institutional investors. Institutional investors start to demand more and more related products such as options and futures.
This can be seen not only in traditional markets such as bonds, equities and commodities, but also in the cryptocurrency market. In recent years, dozens of derivatives have emerged, such as bitcoin futures and options, which over time have even managed to overtake the cash market in terms of size and liquidity.
As a result, we have seen platforms such as Binance Futures develop over time. While consolidated traditional market organisations such as the CME are launching increasingly innovative products based on the crypto world, such as the CME’s bitcoin micro futures. The CME is seeking to democratise the holding of these contracts outside the circles of major investors.
CME micro futures contracts
The CME’s bitcoin micro futures contracts were launched for the first time yesterday. Allowing investors to buy futures contracts on a tenth of the value of a bitcoin. As a result, retail investors are not the only ones who will now be able to participate in the cryptocurrency derivatives market. But large institutional investors will also be able to gain greater flexibility in their investment strategies.
This would be a major change from the original CME bitcoin futures contracts. Which was first launched in 2017, and is currently equivalent to the value of 5 full BTC. Which, at the cryptocurrency’s current price, would be equivalent to more than $270,000, compared to $6,600 for a microcontract.
“If you look at the price of bitcoin and its appreciation over the last few months, the current futures contracts have become prohibitively expensive.” CME Group’s chief investment officer for alternative products, Tim McCourt, commented, explaining the motivations behind the company’s launch of the new derivative.
On its first day of trading on the market, CME micro bitcoin futures traded a volume equivalent to 6,241 BTC. For McCourt, this figure represents a success, and could encourage the company to launch micro futures contracts on other cryptocurrencies such as Ethereum.
