Position Limits for CME Bitcoin Futures Just Doubled | ETF Trends

Monday saw the Chicago Mercantile Exchange amend the position limits for bitcoin futures, options on bitcoin futures, and micro bitcoin futures. 

Position limits are predetermined levels of ownerships that prevent investors from using ownership control over a market and prices. 

The previous spot-month limit for bitcoin futures, options on bitcoin futures, and micro bitcoin futures was previously 2,000. Beginning with the November 2021 contracts, the limit will increase to 4,000. 

Bitcoin futures and options on bitcoin futures each have contract units of five bitcoin, while micro bitcoin futures have contract units of 0.1 bitcoin. 

The CME previously doubled the bitcoin futures position limit in 2019, increasing the max position size from 1,000 contracts to 2,000 due to growing demand. 

With the launch of the first bitcoin futures ETF and the speculation that a bitcoin futures linked-product was on its way, demand for bitcoin futures has been surging, with the dollar value of open interest (OI) hitting record highs on Friday just after the SEC announced its approval of the first bitcoin futures ETF. 

The ProShares Bitcoin Strategy ETF (BITO) launched on Tuesday, seeing a 4.5% increase during its trading debut. 

The price of bitcoin rose 4% to $64,214.30 on Tuesday, just under its all-time high of $64,899 in April. Bitcoin futures had an impressive day as well, rising about 4%. ProShares is the eighth-largest ETF provider by assets. 

ProShares affiliate ProFunds launched the first publicly available bitcoin mutual fund in July of this year. Similar to BITO, the Bitcoin Strategy ProFund (BTCFX) primarily holds bitcoin futures products and does not hold bitcoin directly. 

Both BTCFX and BITO invest in front-month bitcoin futures, which are futures contracts with the shortest time to maturity and are therefore the most closely correlated to the spot price of bitcoin. 

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