The Chicago Mercantile Exchange Group (CME Group) has just announced that it will be launching a Bitcoin futures product, in the form of a micro Bitcoin futures contract. Bitcoin futures are basically a way to trade the price of Bitcoin for a future date. Futures are an agreement between two parties to exchange an asset at a predetermined price at an agreed upon time in the future. The primary goal of the Bitcoin futures market is to reduce volatility and the risk of huge losses. Futures contract are a common tool used by the financial industry to hedge risk and speculate on financial markets. CME Group made the announcement on October 31st and will be offering its Bitcoin futures in the 4th quarter of this year.
CME Group, the world’s largest futures exchange, unveiled the launch of a new futures contract for bitcoin on Monday. The new contract will allow investors to bet on bitcoin in increments as small as $25, a move that may appeal to retail traders. The Chicago-based exchange currently offers trading in bitcoin futures with contracts that require a minimum investment of $5,000 per contract. The exchange has offered some contracts with smaller amounts, but these were cleared with a process that required special approval.
The Chicago Mercantile Exchange (CME) has officially launched its latest bitcoin derivative (BTC), paving the way for a new proliferation of digital assets.
Tim McCourt, global head of equity indices and alternative investment products at CME Group, said the new product will provide an efficient and cost-effective way for a wide range of market participants – from institutions to sophisticated active traders – to refine their exposure to bitcoin and improve their trading strategies.
A micro bitcoin futures contract has a value of 0.1 BTC and offers traders an additional tool to hedge the price risk of the digital currency.
J.B. McKenzie, managing director of TD Ameritrade Futures and Forex, said microbitcoin futures solve two of the biggest problems with investing in cryptocurrencies, namely high costs and the desire to participate in a regulated environment.
Reflecting growing demand for smaller contracts, CME Group announced on 30… March first announced its intention to launch a micro-BTC derivative. At the time, one bitcoin was worth about $58,000, not unlike today’s prices. The leading digital currency jumped above $64,000 in April before undergoing a major decline.
The use of cryptocurrency derivatives has grown exponentially since the CME introduced the very first bitcoin futures contract in December 2017. Although the Chicago Board Options Exchange quickly followed suit, its competitor ultimately rejected the offer.
In December 2020, transactions in crypto-derivatives accounted for 55% of the total market. This number is likely to increase as futures markets such as Bybt, FTX and BitMEX continue to be the mainstay of traders looking to acquire a larger stake in digital assets.
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Frequently Asked Questions
What is Bitcoin CME futures?
CME Group is planning to launch bitcoin futures by the end of the year, so you better brush up on what these are. CME Group is one of the world’s largest futures exchange operators. They provide the technical infrastructure for trading futures, options and other derivatives. This new product offering will give investors exposure to the bitcoin market in an easily tradeable format. Bitcoin is the currency of the Internet: a distributed, worldwide, decentralized digital money. Unlike conventional currencies such as dollars, bitcoins are issued and managed without the need for any central authority whatsoever.
How do CME Bitcoin futures work?
The Bitcoin futures trading on CME is a little different than the CBOE futures trading, where the contract trades based on the price at 11:59 p.m. EST, and settles at 3:00 p.m. EST the following day. The Bitcoin futures trade based on the price of Bitcoin at 5:00 p.m. EST, and settle at 6:00 p.m. EST the following day. As you may know, the Chicago Mercantile Exchange (CME) is one of the largest financial exchanges in the world. The CME’s recent announcement that it plans to start trading bitcoin futures by the end of 2017 sent the cryptocurrency world into a frenzy. A lot of people are worried that trading bitcoin futures on the CME might cause a bitcoin bubble to burst. But does it? In this article, we’ll discuss what CME bitcoin futures are and why some people are worried about them.
Will Bitcoin fill CME gap?
CME Group is set to launch its own futures contract on Dec.18 for bitcoin, adding a fifth major regulated exchange to the nascent cryptocurrency market. The move will give the cryptocurrency a further stamp of approval and legitimacy. Bitcoin jumped more than 2 percent to $16,600 in early trading on the CME Globex platform. This follows the launch of bitcoin futures on the Chicago Board Options Exchange in late 2017, and similar contracts on the Chicago Mercantile Exchange in March, according to CoinDesk. Bitcoin futures are already traded on the Nasdaq Nordic and their contract size is set at 8,000 (about $60,000). Although futures trading and bitcoin have a lot in common, one thing that they don’t have in common is that futures trading generally doesn’t involve the exchange of bitcoin. While futures are a financial instrument used to speculate on the price of assets, they’re not an investment in the underlying asset itself. As a result, bitcoin futures have been seen as a way for investors who can’t or won’t take the plunge into buying the decentralized cryptocurrency to get involved in its potential growth.
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