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The latest contract is one-tenth the value of a single Bitcoin.
The Chicago Mercantile Exchange, or CME, has formally unveiled its newest Bitcoin (BTC) derivatives offering, laying the groundwork for greater mass acceptance of digital currencies.
CME Group’s global head of stock index and alternative investment solutions, Tim McCourt, said that the new product would offer “an efficient, cost-effective way for a diverse range of market participants — from institutions to sophisticated, active traders — to fine-tune their bitcoin exposure and enhance their trading strategies.”
The Micro Bitcoin futures contract is worth 0.1 BTC and gives traders another way to hedge their digital currency price risk.
Micro Bitcoin futures, according to J. B. Mackenzie, managing director of TD Ameritrade Futures and Forex, fix the two main challenges of cryptocurrency investing: “the high cost and the desire to engage within a regulated environment.”
CME Group first announced its intention to launch a micro BTC derivatives product on March 30, citing the demand for smaller-sized contracts. At the moment, one Bitcoin was worth about $58,000, which is comparable to current values.
The leading digital currency skyrocketed above $64,000 in April before experiencing a broad pullback.
Since CME unveiled the first-ever Bitcoin futures contract in December 2017, the use of cryptocurrency derivatives has developed exponentially. And the fact that the Chicago Board Options Exchange soon followed suit, the crosstown competitor would ultimately drop the commodity bid entirely.
In December 2020, crypto derivatives transactions accounted for 55% of the total market. This figure is expected to rise as derivatives markets such as Bybt, FTX, and BitMEX continue to be the go-to for traders finding large exposure to digital assets.