The Chicago Mercantile Exchange (CME) stands as one of the largest derivatives exchanges the world has to offer, and has recently revealed that it’s making plans to launch a brand new product in May. This product in question would be Micro Bitcoin Futures contracts, which would allow traders to start speculating on fractional units of Bitcoin. This new product, however, is still pending the approval of the relevant regulators within the US.
Planning To Offer 0.1 BTC derivatives
The official announcement, made on the 30th of March, stipulated that this new offering will be 10% of a Bitcoin. Now, keeping in consideration that the standard futures contract for CME is sized at 5 Bitcoin, around $288,000, this offering will be around fifty times smaller, with 0.1 BTC being worth around $5,770.
With these micro futures contracts, both small individual traders and institutional investors will be capable of gaining yet another tool in order to hedge their Bitcoin price risk. The offering will be cash-settled against CME’s reference rate. This reference rate in question includes data published from various major exchanges, such as Gemini, Coinbase, itBit, Kraken, as well as Bitstamp.
The Mandatory Kind Words
Tim McCourt stands as the Global Head of Equity Index and Alternative Investment Products at CME Group, and gave the mandatory public statement about the matter at large. He explained that the high demand for smaller contracts from a very large array of clients is the reason why this new product is being introduced, being a direct response to this demand. He claimed that these products will allow participants even more precision and choice when it comes to how they trade in regulated BTC futures, emphasizing the efficiency and transparency of GME Group.
Now, barring the size, the Bitcoin micro futures will behave exactly like the normal Bitcoin futures that CME had launched back in December of 2017. Back in February of this year, the CME Group launched an Ethereum-based futures contract, trying to bank on the cryptocurrency’s budding institutional interest.
Crypto Going Up (Again)
It seems this is a good time to be a crypto owner, however, as almost every major business is getting into it in some way. PayPal already announced that US customers can pay for goods and services through crypto, and Visa revealed that it plans to develop a cryptocurrency-based settlement system using the USDC stablecoin.
At the time of writing, Bitcoin has recovered quite nicely, and is trading hands at $57,775 apiece once more. Time will tell if it’s going to see another “Healthy Correction” in the near future.