Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
MICRO BTC Futures #microBTC
By Mark O’Brien, Senior Broker
On March 30, a CME Group press release announced that it would introduce a new Micro BTC futures contract. Monday, May 3rd will be the futures contract’s first day of trading. This new futures contract reflects CME Group’s expansion of crypto derivatives that includes their Bitcoin futures contract launched in 2017, Bitcoin options in early 2020 and their Ether futures contract just last February.
When its open-sourced software was released in 2009, Bitcoin became the very first digital asset, or cryptocurrency to work as a medium of exchange. Since then, approximately 1800 other cryptocurrencies have been created with a market capitalization that topped $2 trillion this month. Strikingly, Bitcoin comprised approximately half that market cap.
The current Bitcoin futures contract’s underlying asset is 5 Bitcoin and with Bitcoin currently trading between $50K-$60K, the futures contract’s base value is ±$250K-$300K. And unlike nearly all other futures contracts whose margins are set and adjusted fairly infrequently by their exchanges, Bitcoin’s Initial Margin Requirement is recalculated every day based on its closing price, currently at roughly 40% of its base value – over $125K, currently.
The new Micro Bitcoin futures contract’s underlying asset is 1/10 Bitcoin (1/50 the size of the current 5-Bitcoin futures contract).
Needless to say, at 1/50th the leverage of the current Bitcoin futures contract, the smaller-sized Micro BTC futures contract will give traders the ability to fine-tune Bitcoin exposure. And it goes without saying, these contracts trade on a regulated exchange where all participants see the same prices and quotes. Participants enjoy true market transparency and price discovery.
The Micro Bitcoin futures contract builds on the strength and liquidity of CME Bitcoin futures by giving you more choice and flexibility to manage your Bitcoin exposure and add versatility to your trading strategies.
For more information or a professional consultation, or to try a futures trading platform demo, contact Cannon Trading Co.
Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involve substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.