{"id":119034,"date":"2021-03-30T14:00:27","date_gmt":"2021-03-30T14:00:27","guid":{"rendered":"https:\/\/precoinnews.com\/?p=119034"},"modified":"2021-03-30T14:00:27","modified_gmt":"2021-03-30T14:00:27","slug":"a-new-product-makes-trading-bitcoin-futures-on-cme-more-accessible","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/bitcoin\/a-new-product-makes-trading-bitcoin-futures-on-cme-more-accessible\/","title":{"rendered":"A New Product Makes Trading Bitcoin Futures on CME More Accessible"},"content":{"rendered":"

On Tuesday (March 30), the world\u2019s leading derivatives marketplace CME Group announced that it plans to launch a new Bitcoin futures product on May 3 (subject to regulatory approval, of course).<\/p>\n

According to CME\u2019s press release, Micro Bitcoin futures will be 1\/10 the size of one bitcoin (BTC). This smaller-sized contract will \u201cprovide market participants \u2013 from institutions to sophisticated, active, individual traders \u2013 with one more tool to hedge their spot bitcoin price risk or execute bitcoin trading strategies in an efficient, cost-effective way, all while retaining the features and benefits of CME Group\u2019s standard Bitcoin futures.\u201d<\/p>\n

Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products, had this to say:<\/p>\n

\u201cSince the launch of our Bitcoin futures contract in 2017, we have seen steady, ongoing growth of liquidity and market participation in our crypto derivatives, especially among institutional traders. 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.<\/em>\u201c<\/p>\n

The new futures contract will be \u201ccash-settled, based on the\u00a0CME CF Bitcoin Reference Rate, which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin.\u201d<\/p>\n

Here is CME explaining the motivation behind the launch of this product:<\/p>\n

\u201cSince the launch of the Bitcoin futures (BTC) contract in December 2017, its notional value has increased dramatically. As a reference, see a chart of the BTC settlement prices since launch.<\/em><\/p>\n

\u201cThe BTC notional value has increased from $19K on the date that it launched to nearly $58K on March 11, 2021. The amount of capital needed to access the futures market has significantly increased. To make our market more accessible to risk managers and other traders, CME will launch the Micro Bitcoin futures contract, which is 1\/50 the size of the Bitcoin futures contract (i.e. 1\/10 of one bitcoin versus five bitcoin for Bitcoin futures (BTC).<\/em>\u201c<\/p>\n

CME says these are the main benefits of this new product:<\/p>\n