CME expands suite of crypto derivatives products by launching micro Bitcoin futures


  • CME's newest derivatives product would allow a broader range of investors to participate in the cryptocurrency market.
  • Micro Bitcoin futures recently launched by the exchange giant would be a more cost-effective method for traders to fine-tune their BTC exposure.
  • The growing demand and the surging price of the leading cryptocurrency were cited as the main drivers for introducing this new product.

The Chicago Mercantile Exchange (CME) has launched a new futures product targeting retail investors as demand for Bitcoin continues to grow at an exponential rate. 

Fueling crypto adoption by lowering entry barrier

The new micro Bitcoin futures contract by CME will be one-tenth the size of a Bitcoin, providing a more cost-effective entry for market participants. The new cryptocurrency derivatives product could open the door to wider mainstream adoption of the new asset class.

Worth 0.1 BTC, the micro Bitcoin futures contract could give traders an additional tool to hedge their cryptocurrency risks. According to JB Mackenzie, managing director of TD Ameritrade Futures and Forex, micro Bitcoin futures could solve two main issues with investing in cryptocurrencies

The two critical entry barriers are the “high cost and the desire to engage within a regulated environment,” affirmed Mackenzie.

Since the launch of CME’s Bitcoin futures contract in late 2017, the cryptocurrency derivatives industry has grown exponentially. In December 2020, crypto derivatives trades made up 55% of the overall market. 

Asset management giant BlackRock also previously revealed that it had purchased Bitcoin futures from CME. 

In late March, CME first announced its intent to launch a micro Bitcoin derivatives product, citing the growing demand for smaller contracts. Tim McCourt, CME Group global head of equity index and alternative investment products, said:

We are pleased to introduce this new contract at a time when we continue to see a consistent growth of liquidity and participation in our crypto futures and options.

In an earnings call, Sean Tully, senior managing director and global head-financial and OTC products at CME, noted that the first-quarter revenue from Bitcoin futures offering was higher than the entirety of 2020, which was about $4.7 million. He added that Q1 was positive and much more robust than in the past. Tully expects a wider customer base for the new derivatives product.

CME micro Bitcoin futures contract launched on May 3. Brooks Dudley, global head of digital assets at ED&F Man Capital Markets, said:

We executed the first block trade of 140 lots for two of our clients – Genesis Trading and XBTO. These smaller right-sized CME micro Bitcoin futures contracts will make crypto futures trading more accessible for traders of all sizes.

The micro BTC futures are cash-settled, based on the CME CF Bitcoin Reference Rate.

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