CME Introduces Bitcoin 'Friday' Futures for Retail Market

August 28, 2024 04:04 PM AEST | By Team Kalkine Media

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CME Introduces Bitcoin 'Friday' Futures for Retail Market — Image source: shutterstock

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The Chicago Mercantile Exchange (CME) Group is set to launch a new futures product, the Bitcoin Friday Futures (BFF), on September 30. This new offering is designed to cater to growing interest in cryptocurrency futures among retail participants. The BFF contracts will be sized at one-fiftieth of a Bitcoin, making them significantly smaller than other retail-oriented Bitcoin futures products, such as Coinbase’s nano Bitcoin futures, which are sized at one-hundredth of a Bitcoin.

The BFF contracts will be cash-settled every Friday and will be based on the CME CF Bitcoin Reference Rate New York Variant (BRRNY), which serves as a benchmark for Bitcoin’s spot price. Giovanni Vicioso, CME Group’s global head of cryptocurrency products, stated that these weekly expiring contracts will enable investors, ranging from institutions to active retail traders, to fine-tune their Bitcoin exposure more precisely on a regulated platform.

Interest in Bitcoin futures is increasing in the United States, with open interest in CME Bitcoin futures nearing 30,000 contracts as of August 20. Each CME Bitcoin futures contract represents five Bitcoins. The introduction of BFFs is expected to provide a cost-efficient means for traders to manage Bitcoin exposure and refine their trading strategies.

CME Group faces competition from other platforms, such as Coinbase Derivatives, which offers futures contracts for Bitcoin, Ether, {Litecoin} (LTC) , and Dogecoin. Futures contracts are standardized agreements that allow for the purchase or sale of an underlying asset at a predetermined future date. They are used for hedging strategies and speculative trading due to their leverage capabilities.

Tanmay Sheth, director of futures at Webull, noted that the smaller contract size and weekly expiry of the BFFs will offer global traders a cost-effective method to gain Bitcoin exposure and manage existing portfolios. Additionally, other cryptocurrency derivatives, including options, are anticipated to launch on U.S. exchanges in the near future.

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