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How CME Group's 'Micro Bitcoin Futures' Could Affect Crypto Markets



On May 4, Beijing time, the Chicago Mercantile Exchange Group (CME), a derivatives trading market, announced the launch of "micro Bitcoin Futures" (micro Bitcoin Futures). The transaction size is only one-tenth of a Bitcoin. Attracting more retail investors and institutional investors looking for trading flexibility, it also provides investors with an efficient and cost-effective new way to fine-tune Bitcoin exposure to enhance trading strategies.

At the current price of bitcoin in the cryptocurrency market, it means that the average investor can buy a bitcoin futures contract at CME Group for as little as $6,660. Before the launch of "micro bitcoin futures", investors would need to pay at least about $290,000 if they wanted to purchase bitcoin futures products through CME Group.

Voice | CME Group executives: Expect huge demand for its bitcoin options in Asia: CME Group is preparing to launch another bitcoin derivative product, bitcoin options, in the first quarter of 2020 . According to the South China Morning Post, the company’s bitcoin futures contracts have been hugely popular with institutional investors, and the group hopes that its upcoming bitcoin options will also be popular. The firm's global head of equity products and alternative investments, Tim McCourt, said the recent spike in volumes in bitcoin futures contracts will pave the way for other derivatives products to be more successful. The biggest day for bitcoin futures contract volume was May 13, when a record 34,000 futures contracts were traded, equivalent to 17,000 bitcoins. McCourt believes that with bitcoin options, traders will be able to better manage their risk. Bitcoin options can also benefit Bitcoin miners, who can use derivatives contracts to hedge production costs. Some Chinese miners have been using futures contracts for hedging purposes. That's why CME Group has high hopes for Asian markets. (ambcrypto)[2019/10/10]

Tim McCourt, head of global equity indices and alternative investment products at CME Group, said:

CME Group is applying for technical patents to modify blockchain rules: According to the latest patent documents released by the U.S. Patent and Trademark Office, the Chicago Mercantile Exchange Group (CME Group) is studying how to make developers do not need to obtain the consensus of all network nodes The rules of the blockchain can be modified. This is a key requirement for some systems, such as part of airline reward points programs and other applications that use blockchain for real-time storage and maintenance of information. [2018/2/12]

When you look at the current price of Bitcoin, and how much it has appreciated over the past few months, you know that futures futures contracts could be prohibitively expensive. "

A futures contract is an "obligation" that allows traders to buy or sell assets at a certain price within a given date in the future. For example, if you plan to buy 1 BTC at today's price of $56,660 in the next few months, you can lock in that price through a futures contract, which is a great investment model for hedgers looking to hedge risks. friendly.

CFTC Partners with CME and Cboe Global Markets to Set Oversight Standards for Bitcoin Contracts: According to Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo Collaborated to ensure they "set appropriate oversight standards for these bitcoin contracts". [2017/12/3]

Futures contracts, on the other hand, are also good for cryptocurrency speculators, as they can trade, buy and sell assets just like any other market, earning a bet on the difference between the contract price at the time of signing and the actual market price on a given future date . For arbitrageurs, betting on the spread can be lucrative if done correctly.

However, it should be noted that if you want to enter the "futures game", you must have a certain risk-taking ability. 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 come to four years later In 2021, the value of these five bitcoins has soared to $290,000. In this case, the "miniature bitcoin futures contract" can effectively lower the investment threshold, because investors only need to spend about $6,000 to explore the "futures game".

The Future of Bitcoin Futures: CME Group Lists Details but Regulators Have No Clear Statement: Chicago Mercantile Exchange (CME) is already working on the details of Bitcoin futures, but the Commodity Futures Trading Commission (CFTC) is unclear on this matter . [2017/12/1]

Quite frankly, “micro bitcoin futures contracts” primarily appeal to retail traders who price on raw quotes, which are often less affordable. Institutional users, including cryptocurrency-native trading firms, are also likely to be interested in this “micro” trading product, Tim McCourt said, as such users also want more leeway in their trading strategies. Instead of having to invest in $290,000 increments, they have the $6,000 option.

However, if the price of Bitcoin continues to climb, and even reach higher prices, then the current "miniature Bitcoin futures contract" owner may also put many people off in the future. However, CME Group will also have countermeasures at that time. According to Tim McCourt, if this happens, CME Group will consider offering contracts of different sizes.

In February, CME Group launched ethereum futures, and according to relevant data, the contract volume in April reached a record 5,500 contracts. Tim McCourt explained that the transaction size of the Ethereum futures contract is 50 ETH, which 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 risen. More than five times, even at today's prices, the value of each contract is only about 115,000 US dollars, which is really small compared to the size of Bitcoin futures contracts. However, if the skyrocketing price of ethereum continues, it is likely that CME Group will also launch a "micro ethereum futures contract."

According to Tim McCourt, after the launch of the "miniature bitcoin futures contract", it attracted 6,241 bitcoin transactions on the same day. Judging from the numbers, this new product has achieved good results.

During CME Group Inc.'s earnings call in March, Sean Tully, the exchange's senior managing director, said that CME Group received $4.7 million in bitcoin futures contract offerings in the first quarter of 2021. US dollar revenue, higher than last year's full year. But he went on to point out that despite the product's success, its features limited the number of customers. Sean Tully explained that currently your bitcoin futures product contains 5 bitcoins, and the margin requirement for a contract usually exceeds $105,000, which obviously limits the number and type of participants. Sean Tully believes that with the new micro-bitcoin futures contracts, margins will be 1/50 of what they were, or around $2,000. Therefore, this will open up a wider potential customer base for the product. In addition, the nominal size of the contract is 1/50 of the large contract, that is, 1/10 bitcoin, but the fee rate is 1/2 of the existing bitcoin futures contract, and the fee compared to other exchanges will also be 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 bring a huge impact to the entire cryptocurrency futures market.


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