CME to launch bite-sized Bitcoin ‘Friday’ futures in bid for retail

Each futures contract is sized at one-50th of 1 BTC.

Chicago Mercantile Exchange (CME) Group, a United States futures exchange, is launching bite-sized Bitcoin Friday futures (BFF) amid mounting interest in cryptocurrency futures among retail investors, according to an Aug. 27 announcement by CME. 

Launching Sept. 30, BFFs will be sized at only one-50th of a Bitcoin (BTC). That is substantially smaller than rival retail-oriented Bitcoin futures products, such as Coinbase’s “nano” Bitcoin futures, sold in increments of one-100th of 1 BTC. 

The contracts will be cash-settled every Friday against the CME CF Bitcoin Reference Rate New York Variant (BRRNY), a benchmark for BTC’s spot price. 

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“With these weekly expiring smaller-sized contracts, investors of all sizes – from institutions to sophisticated, active retail traders – will be able to more accurately fine-tune their Bitcoin exposure on a regulated exchange,” said Giovanni Vicioso, CME Group’s global head of cryptocurrency products, in a statement. 

Bitcoin futures are surging in popularity in the US, with open interest on CME BTC futures contracts nearing 30,000 contracts as of Aug. 20, according to data from the US Commodity Futures Trading Commission. Each CME Bitcoin futures is sized at 5 BTC. 

CME faces competition from rivals such as Coinbase Derivatives, which offers futures contracts for Bitcoin, Ether (ETH) and alternative cryptocurrencies, such as Litecoin (LTC) and Dogecoin (DOGE). 

Futures contracts are standardized agreements to buy or sell an underlying asset at a future date. They play a critical role in hedging strategies for institutional investors. Futures are also popular for speculation because they allow traders to double down on directional bets with leverage. 

“With its smaller notional size and weekly Friday expiry, Bitcoin Friday futures will allow our global traders a cost-efficient way to gain exposure to Bitcoin, as well as effectively manage their existing product portfolios and capture new trading strategies,” said Tanmay Sheth, director of futures at Webull — a retail-oriented electronic trading platform — in a statement.

Other types of cryptocurrency derivatives, such as options, are expected to launch on US exchanges soon.

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