CME Micro Bitcoin futures surpass 1M contracts as institutional speculation grows

The latest CME Group Inc. (CME) (NYSE:CME) contract for Bitcoin futures has surpassed a million contracts for the first time, marking a major milestone on the path toward the growing popularity of the digital asset. The contract has been in place since December 2017, and its increased popularity has been fueled by the flood of institutions that have begun pouring money into the digital asset class.

The CME Group has announced that it intends to launch its first Bitcoin futures contract during the fourth quarter of this year. The contract, the first of its kind, will be rolled out by the end of the year. The futures contract is designed to provide investors with a risk-free way to short the cryptocurrency.

Last week the Chicago Mercantile Exchange (CME) announced that it had already surpassed 1,000 contracts for the flagship bitcoin futures contract, known as XBT.

Institutional exposure to cryptocurrencies via derivatives continued to grow in the second quarter, with CME Group’s recently launched Bitcoin (BTC) microcontract gaining significant popularity in the first two months of trading.

The CME Micro Bitcoin futures contract has already seen 1 million contracts surpassed since its launch on May 3, the Chicago-based futures exchange announced earlier this week. Tim McCourt, managing director of the CME, said the new product is popular with institutions and day traders who want to hedge the risk associated with the bitcoin spot price.

With a face value of 0.1 BTC, a micro contract is equivalent to one tenth of a bitcoin. By comparison : The unit of a basic bitcoin futures contract on the CME is 5 BTC.

We saw more institutional volume than expected, suggesting the time was right for a smaller bitcoin contract, said Brooks Dudley, global head of digital assets at ED&F Man Capital Markets.

Related: Bitcoin will reach $160,000 this year, says CEO of Celsius

During the recent correction, institutions have been unwinding long-term investments in bitcoin and other cryptocurrencies, with outflows totaling $79 million last week, according to CoinShares. In the case of BTC, recently liquidated coins are bought back by long-term holders who still have confidence in the long-term prospects of their investments.

The increased activity in the futures market suggests that traders are hedging their positions, speculating on bitcoins movement in the short term, or both. While derivatives trading has increased institutional influence on bitcoin, it has also been a source of stress for bitcoin holders. According to Cointelegraph, Friday’s $6 billion Bitcoin and Ether (ETH) expirations caused significant friction in the market, with some traders expecting extreme volatility.

Over the past week, the price of bitcoin has mostly fluctuated between $30,000 and $35,000. Source: Cointelegraph

The second half of the week saw a lot of volatility as the price of BTC fell between the 24th and 26th. June fell from peak to trough by 13.6%.The CME Group’s bitcoin futures trading platform surpassed one million contracts in volume during the week ending April 5th. While the total value of contracts traded was $1.6 billion, the majority of the volume (6900 bitcoins or $1.3 billion) was generated by 633 contracts that traded for $10,000 each.. Read more about cme group to launch micro bitcoin futures and let us know what you think.

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