Because of the skyrocketing Bitcoin price the derivatives market needed to offer a smaller-sized futures contract.
Chicago Mercantile Exchange (CME) Group launched micro Bitcoin futures at one-tenth of the size of one Bitcoin. The new offer aims to attract more retail investors and institutions.
Now the micro Bitcoin futures are available to investors at $6,660. Compared to the price of non-micro Bitcoin 290,000.
“When you look at the price of Bitcoin and how much it’s appreciated over the last several months, current future contracts have become prohibitively expensive,” Tim McCourt, CME Group global head of equity index and alternative investment products.
Future contracts are obligations on traders to buy or sell an asset at a certain price and given date. If you’re planning on buying 1 BTC at today’s price of $56,660 in a couple of months, then you can lock in that price through a futures contract. That’s good for hedgers.
But futures contracts are also good for speculators as well. They can also be bought and sold like any market-traded asset, allowing bets on the price difference between the contract price at the time of signing and the real market price at that given future date.
Micro contracts appeal to retail traders priced out by the original offering, but it’s not just about affordability. McCourt said there’s also been interest from institutional users—including crypto-native trading firms—who wanted more wiggle room in their trading strategies. They no longer have to invest in $290,000 increments when there’s an option of $6,000.
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