The Chicago Mercantile Exchange (CME) has announced plans to launch a new bitcoin derivatives (BTC) product that will allow traders to speculate on fractions of the digital currency’s flagship currency.
The CME Group microbitcoin futures contract, which opened on 3. May, subject to regulatory approval, will have a value of 0.1 BTC. The smaller contract size gives market participants an additional tool to hedge bitcoin’s price risk, the CME said Tuesday. The current contract unit of bitcoin on the CME is 5 BTC.
Tim McCourt, head of global equity indices and alternative investment products at CME Group, explains:
The introduction of Micro Bitcoin Futures is a direct response to the demand for smaller contracts from a variety of clients and will provide even more choice and precision in how participants can trade regulated bitcoin futures contracts in a transparent and efficient manner within the CME Group.
The CME launched its bitcoin futures contract in December 2017. The Chicago Board Options Exchange, its big-city rival, was the first to introduce a derivatives contract this month, but has since dropped bitcoin futures altogether.
The CME has seen steady growth in crypto-derivatives trading since it launched its first bitcoin futures contract over three years ago. As Cointelegraph previously reported, the average daily trading volume for CME bitcoin futures increased by 57% in January. Interest is likely to grow as the bitcoin bull market attracts new investors.
There are also signs that the broader crypto derivatives market is heating up. According to CoinMarketCap, crypto derivatives transactions exceeded $1.3 trillion in December 2020, accounting for 55% of the total market.
frequently asked questions
When did the CME launch bitcoin futures?
CME Group will launch the Micro Bitcoin Futures program on the 3rd. Launching in May.
How do CME bitcoin futures contracts work?
Like stock or commodity futures, bitcoin futures allow investors to speculate on the forward price of bitcoin. CME offers monthly bitcoin futures contracts for cash settlement. … Bitcoin is known for its price volatility, making it a risky investment.
How does the CME Group make money?
1. Payments for clearing and transactions : It includes electronic commerce fees, private transaction fees, and other volume-based fees. 2. Marketing data and information : This includes revenue from the distribution of subscriber data.
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