By Brenda Ngari
One of the world’s largest derivatives exchanges, the Chicago Mercantile Exchange (CME), is planning to launch micro bitcoin futures contracts in May, thus enabling traders to speculate on fractional units of BTC. CME’s new product is, however, pending approval from U.S. regulators.
CME Group Expands Bitcoin Offering To Include Small-Sized Futures
According to an official announcement on March 30, the new offering will be one-tenth the size of one bitcoin. For perspective, the standard CME futures contract is sized at 5 BTC (equivalent to $295,000). In contrast, the new micro futures contract will be worth 0.1 BTC — or $5,900.
These micro futures contracts will provide institutional investors and small individual traders another tool to hedge their bitcoin price risk and will be cash-settled against the CME reference rate that includes data from major crypto exchanges like Coinbase, Gemini, Kraken, itBit, and Bitstamp.
Tim McCourt, CME Group’s global head of equity index and alternative investment products, explained that the new product is being launched in response to high demand for smaller contracts from a wide range of clients.
“The introduction of Micro Bitcoin futures responds directly to demand for smaller-sized contracts from a broad array of clients and will offer even more choice and precision in how participants can trade regulated Bitcoin futures in a transparent and efficient manner at CME Group.”
It should be noted that the micro futures come with all the features and advantages of the exchange’s normal bitcoin futures that were launched in December 2017.
Earlier in February, CME launched its futures contracts for ethereum cryptocurrency in a bid to take advantage of the growing institutional interest in cryptocurrency.
Good News For Bitcoin Investors Just Keep Coming
CME Group hit the headlines shortly after PayPal announced that it would allow U.S. customers to pay for goods and services at the 29 million or so online merchants with cryptocurrency.
Additionally, Visa revealed this week that it is set to launch a payment functionality using USDC stablecoin on the ethereum blockchain. Such bullish developments around the flagship cryptocurrency have stirred the bulls, sparking a rally in recent days.
Bitcoin is trading just above $59,000 at press time, with 1.58% gains over the past 24 hours. The swift rebound to near $60K indicates strong confidence from investors in the OG cryptocurrency.