CME Group introduces micro Bitcoin futures

The new contract is worth one-tenth the size of a single Bitcoin.

The Chicago Mercantile Exchange, or CME, has officially launched its newest Bitcoin (BTC) derivatives product, setting the stage for wider mainstream adoption of digital assets. 

TIm McCourt, CME Group’s global head of equity index and alternative investment products, said the new product will provide “an efficient, cost-effective way for a broad array of market participants — from institutions to sophisticated, active traders — to fine-tune their bitcoin exposure and enhance their trading strategies.”

The Micro Bitcoin futures contract is worth 0.1 BTC, which provides traders with an additional tool to hedge their digital currency price risk.

J. B. Mackenzie, managing director of TD Ameritrade Futures and Forex, said Micro Bitcoin futures address the two biggest issues with cryptocurrency investing — “namely, the high cost and the desire to engage within a regulated environment.”

Citing growing demand for smaller-sized contracts, CME Group first announced its intent to launch a micro BTC derivatives product on March 30. At the time, 1 Bitcoin was worth roughly $58,000, which is not unlike current prices. The leading digital currency skyrocketed above $64,000 in April before experiencing a broad pullback.

The use of cryptocurrency derivatives has grown exponentially since CME launched the first-ever Bitcoin futures contract in December 2017. Although the Chicago Board Options Exchange quickly followed suit, the crosstown rival would eventually abandon the product offering altogether.

Crypto derivatives trades accounted for 55% of the overall market in December 2020. That figure is likely to grow as derivatives exchanges like Bybt, FTX and BitMEX remain the go-to for traders seeking oversized exposure to digital assets.