What CME Micro Futures Mean for the Bitcoin Market


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Skyrocketing Bitcoin prices have forced the derivatives marketplace to offer a smaller-sized futures contract. Here’s what that means.

In brief

  • As Bitcoin’s price has massively increased, Bitcoin futures are now too expensive for many.
  • CME Group, which launched Bitcoin futures in 2017, now offers micro versions of those contracts.

Derivatives marketplace Chicago Mercantile Exchange (CME) Group today launched micro Bitcoin futures at one-tenth the size of one Bitcoin. The new offering aims to attract priced-out retail investors and flexibility-seeking institutional investors.

What it boils down to is that Bitcoin futures contracts are now available to investors at $6,660 in today’s market—a far cry from $290,000, the worth of non-micro Bitcoin futures.

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“When you look at the price of Bitcoin and how much it’s appreciated over the last several months, current future contracts have become prohibitively expensive,” Tim McCourt, CME Group global head of equity index and alternative investment products.

Futures contracts are obligations on traders to buy or sell an asset at a certain price on a given future date. If you’re planning on buying 1 BTC at today’s price of $56,660 in a couple of months, then you can lock in that price through a futures contract. That’s good for hedgers.

But futures contracts are also good for speculators. They can also be bought and sold like any market-traded asset, allowing bets on the price difference between the contract price at the time of signing and the real market price at that given future date. The price difference makes a sweet profit for the arbitrageur who makes a correct bet.

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To play the futures game though, you have to be able to afford them. The original CME Bitcoin futures contract, launched in December 2017, is worth five Bitcoin—not a huge deal then, but it’s around $290,000 today. In contrast, a micro Bitcoin future at one-tenth of one Bitcoin comes down to $6,000.

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Micro contracts appeal to retail traders priced out by the original offering, but it’s not just about affordability. McCourt said there’s also been interest from institutional users—including crypto-native trading firms—who wanted more wiggle room in their trading strategies. They no longer have to invest in $290,000 increments when there’s an option of $6,000.

But if Bitcoin’s price keeps climbing even higher, the current micro Bitcoin contracts could also price out a lot of people in the future. CME would consider offering differently-sized contracts if that were to happen, said McCourt.

In February, CME launched Ethereum futures, and last month recorded 5,500 contracts trading. Ethereum futures contract worth 50 ETH seemed like the right size, “even a relatively small contract,” said McCourt, but Ethereum’s price has now more than quintupled. Each contract’s now worth $115,000 in today’s price. It’s still small potatoes compared to Bitcoin futures of course, but micro Ethereum futures might also be on the horizon, if Ethereum’s meteoric price rise continues.

Today’s launch of micro Bitcoin futures saw the equivalent of 6,241 Bitcoin trade, which McCourt described as a hugely successful first day.

In an earnings call last March, CME senior managing director Sean Tully said the marketplace generated $4.7 million in revenue from Bitcoin futures offering in this year’s first quarter. Micro futures may add a major spike to that figure, if today’s success is any indication of their future.

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