CME Group Launches Micro Bitcoin Futures Contract
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Answer CME Group Launches Micro Bitcoin Futures Contract
Institutional adoption is not only by direct investment in encrypted digital currencies, but can extend and be indirectly by supporting cryptocurrency trading and adding other crypto products and derivatives that comply with regulations and are accepted by institutions.
announced CME Group yesterday announced the launch of Micro Bitcoin futures contracts.
Small Bitcoin futures contracts, meaning 1/10 of the volume of Bitcoin, which are mainly provided to small investors to provide them with exposure to the Bitcoin market.
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The Chicago Mercantile Exchange was by far one of the first companies to launch bitcoin futures into the market, but they have always offered big contracts, with each contract representing as much as 5 bitcoins.
Contracts of this size are only suitable for large investors, not to mention the fact that the value of Bitcoin has nearly tripled since the contracts were launched in late 2017.
The rise in the price and value of Bitcoin and the requirement of 5 Bitcoin prevented small investors from effectively using these contracts, which is why the CME Group decided to make the new contracts small in size, which means that they are fifty times smaller than their predecessors.
Tim McCorm, Global Head of Equity Index and Alternative Investment Products at CME Group said:
We are pleased to introduce this new contract at a time when we continue to see steady growth in liquidity and participation in our cryptocurrency futures contracts and options.
At the size of one-tenth of a bitcoin, Micro Bitcoin futures will provide a cost-effective way for a wide range of market participants from institutional to active and sophisticated traders to adjust their exposure to Bitcoin and improve their trading strategies, all while retaining the benefits of CME Group’s Bitcoin futures. .
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How does CME Group’s micro-futures work?
New smaller contracts will allow more customers to participate in the bitcoin market, and larger institutions will allow customers to manage their exposure to bitcoin more.
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CME’s new micro-bitcoin futures are cash-settled, like previous contracts, based on the “CME CF Bitcoin” rate that serves as a one-time-a-day reference rate for the US dollar price of bitcoin.
The increase in the range of derivative products in traditional financial markets to allow traders and investors to take positions on Bitcoin demonstrates on the one hand that their interest is growing, and on the other hand that financial institutions are increasingly willing to commit to expanding into this new market.
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