CME Launches Micro Bitcoin Futures Contract | ETF Trends

Earlier this month, the Chicago Mercantile Exchange (CME), the world’s leading derivatives exchange, launched Micro Bitcoin futures.

The Micro Bitcoin futures contract represents one-tenth of one Bitcoin and is based on the CME CF Bitcoin Reference Rate, a once-daily benchmarking of the price of Bitcoin to the US dollar. The contracts are cash-settled.

“We are pleased to introduce this new contract at a time when we continue to see consistent growth of liquidity and participation in our crypto futures and options,” said Tim McCourt, CME group global head of equity index and alternative investment products, in the press release announcing the launch.

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CME’s existing Bitcoin futures represent five Bitcoins per contract, which at current Bitcoin prices represent a substantial upfront cost.

However, the Micro Bitcoin’s smaller contract size allows traders with lower asset bases, including smaller institutions and retail investors, to buy and trade the contracts.

In the launch announcement, executives from E*Trade Financial, TD Ameritrade, Interactive Brokers, TradeStation, and Genesis Trading all confirmed that the futures would be available on their platforms.

Micro Bitcoin futures “addresses two of the biggest issues when it comes to investing in cryptocurrency, namely the high cost and the desire to engage within a regulated environment,” said J.B. Mackenzie, Managing Director at TD Ameritrade Futures and Forex, LLC, as quoted in the press release.

Already, initial volume in the contract has been substantially higher than for the existing CME Bitcoin futures contract. On May 12, roughly 27,800 Micro Bitcoin futures exchanged hands, compared to 9,500 regular Bitcoin futures, according to CME data.

No ETFs currently hold Bitcoin futures, though several proposed Bitcoin ETFs would track the same reference rate as CME’s original Bitcoin future contract.

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