CME Group to Launch Cash-Settled Micro Bitcoin Futures

“We’ve had a lot of demand from customers to introduce a smaller size bitcoin contract,” said Tim McCourt, CME Group global head of equity index and alternative investment products.

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key takeaways

  • CME Group will launch cash-settled micro bitcoin futures worth 1/10 of one bitcoin in May.
  • Smaller contracts will allow for greater hedging and exposure opportunities for individual and institutional investors.

CME Group will launch cash-settled micro bitcoin futures contracts worth one-tenth of one bitcoin on May 3, the company announced Tuesday. 

“We’ve had a lot of demand from customers to introduce a smaller size bitcoin contract,” said Tim McCourt, CME Group global head of equity index and alternative investment products. 

“When you look at the recent rise in the price of bitcoin, the current contracts have really gotten too large for some, either in terms of the precision that folks need with managing or allocating capital to cryptocurrency, or they could be hedging some of their other crypto related strategies, whether it be options or in the underlying spot market.” 

CME Group’s current bitcoin futures contracts, which launched in 2017, have five bitcoin and are about $300,000, McCourt said. The micro bitcoin futures contracts will be around $6,000, allowing smaller investors to get involved in the digital asset space. 

The new contracts will be cash-settled, based on the CME CF Bitcoin Reference Rate, which is  a daily reference rate of the US dollar price of bitcoin.

“With the size of the contract continuing to grow as a function of the rising price of bitcoin, we think this will help us grow even further as we allow more market participants to scale their positions, to deploy different types of strategies, as well as bring new participants,” said McCourt. 

The Chicago-based exchange launched ethereum futures contracts earlier this year, further establishing itself as one of the most pro-cryptocurrency regulated exchanges in the US. On average, 767 ether contracts have been traded each day since their launch in February, which is equivalent to 38,400 ether. 

CME Group bitcoin futures trading volumes have steadily increased in the past several years, especially as bitcoin has risen in price and popularity. So far in 2021, 13,800 CME bitcoin futures contracts have traded on average each day, equivalent to 69,000 bitcoin. 

“We have seen great signs that the growth we’ve been able to manifest over the last three-plus years will certainly lend itself to what we hope will be a successful introduction of the contracts in May,” said McCourt.

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