What impact does CME Group’s “micro Bitcoin futures” have on the crypto market?


On May 4, Beijing time, the Chicago Mercantile Exchange Group (CME) Announced the launch of “micro Bitcoin Futures” (micro Bitcoin Futures), deal size is only a tenth of a bitcoin, this new product is designed to attract more retail investors to invest persons and institutional investors seeking to trade flexibility, more Investors provide an effective and cost-effective new way to fine-tune Bitcoin exposure to enhance trading strategies.

If you follow the current encryption currency calculate Bitcoin market price, meaning that ordinary investors can only spend $ 6,660 in bitcoin business purchased by ChicagoFutures contract. Before the launch of “micro bitcoin futures”, investors who wanted to buy bitcoin futures products through CME Group would have to pay at least about $290,000.

Tim McCourt, Head of Global Equity Indices and Alternative Investment Products at CME Group said:

When you look at the current price of Bitcoin and the appreciation in the past few months, you will know that futures contract prices may be prohibitively high. “

A futures contract is an “obligation” (Obligation) that allows traders to buy or sell assets at a certain price on a given date in the future. For example, if you plan to buy one at today’s price of $56,660 in the next few months BTC, The price can be locked in through a futures contract. This investment model is very friendly to hedgers seeking risk hedging.

On the other hand, futures contracts are also very beneficial to cryptocurrency speculators because they can trade, buy and sell assets like other markets, thereby earning the difference between the contract price when the bet is signed and the actual market price at a given future date. . For arbitrageurs, if they can bet on the spread correctly, then they can make considerable profits.

However, it should be noted that if you want to enter the “futures game “, you must have a certain degree of risk tolerance. In December 2017, CME Group launched the Bitcoin futures contract for the first time. At that time, the minimum purchase share of the contract was 5 BTC. In 2017, the price of five Bitcoins was not too high, but when we came to four years later In 2021, the value of these five bitcoins has soared to $290,000. In this case, the “micro bitcoin futures contract” can effectively lower the investment threshold, because investors only need to spend about $6,000 to explore the “futures game.”

Frankly speaking, “micro bitcoin futures contracts” mainly attract retail traders who are priced at the original price, and their price affordability is usually relatively poor. Tim McCourt said that institutional users (including cryptocurrency native trading companies) are also likely to be interested in this “micro” trading product, because such users also want to leave more leeway in their trading strategies. They have the option of $6,000 instead of investing in increments of $290,000.

However, if the price of Bitcoin continues to rise, or even reaches a higher price, the current “micro Bitcoin futures contract” owner may also discourage many people in the future. However, CME Group will have countermeasures by then. According to Tim McCourt, if this happens, CME Group will consider offering contracts of different sizes.

In February, CME Group launched Ethereum futures. According to relevant data, the contract trading volume in April reached a record 5,500 contracts. Tim McCourt explained that the transaction size of the Ethereum futures contract is 50ETH, This seems appropriate. The relatively small contract size means that the “sensitivity” to the price will not be too high. For example, the current price of Ethereum has increased by more than five times. Even at today’s price, the value of each contract It is only about $115,000, which is really insignificant compared to the size of the Bitcoin futures contract. However, if the price of Ethereum continues to skyrocket, CME Group is likely to also launch a “micro-Ethereum futures contract.”

According to Tim McCourt, after the launch of the “micro bitcoin futures contract”, it attracted 6,241 bitcoin transactions on the same day. From a numerical point of view, this new product has achieved good results.

During the CME Group’s earnings conference call in March, Sean Tully, senior managing director of the exchange, stated that CME Group received 4.7 million from Bitcoin futures contract products in the first quarter of 2021. U.S. dollar income is higher than last year. But he went on to point out that despite the success of the product, its characteristics limited the number of customers. Sean  Tully explained that at present, one of your bitcoin futures products contains 5 bitcoins, and the margin requirement for one contract is usually more than $105,000, which obviously limits the number and types of participants. Sean Tully believes that with the new micro bitcoin futures contract, the margin will be 1/50 of the original, which is about $2,000. Therefore, this will open a wider base of potential customers for this product. In addition, the nominal size of the contract is 1/50 of the large contract, that is, 1/10 bitcoins, but the fee rate is 1/2 of the existing bitcoin futures contract, which is also relative to the fees of other exchanges. Much lower.

It is undeniable that if the “micro bitcoin futures contract” develops smoothly, it is likely to bring greater returns to CME Group in the future, and it will also have a huge impact on the entire cryptocurrency futures market.

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