As Demands Rise, CME Micro Bitcoin Futures Reach 1M Contracts

  June 28, 2021

The Chicago-based company CME Group has witnessed an expansion of its Micro Bitcoin futures reach, which were launched in early May this year.

The CME Micro Bitcoin Futures Reach 1M Contracts

The second quarter saw a rise in institutional exposure to cryptocurrencies via futures, with CME Group’s newly launched Bitcoin (BTC) micro contracts are experiencing a large rise in trading activity in its first two months.

CME’s Micro Bitcoin futures contract, which debuted on May 3, has already topped 1 million contracts traded, according to the Chicago-based derivatives exchange. 

According to CME CEO Tim McCourt, the new product has been well received by institutions and day traders wanting to hedge their spot against Bitcoin price risk.

The micro contract is a tenth of the size of a Bitcoin and is valued at 0.1 BTC. The basic contract unit for Bitcoin futures at CME is 5 BTC.

“We saw more institutional traffic than expected, which showed that the timing for a smaller Bitcoin contract was suitable,” said Brooks Dudley, ED&F Man Capital Markets Digital Investment Group global.

Increasing Institutional Interest In Bitcoin

With withdrawals of $79 million last week, the current decline resulted in a decrease in institutions’ long-term exposure to Bitcoin and other cryptocurrencies. 

For BTC, newly sold coins are gathered from long-term holders who are convinced of the long-term prospects of their investments.

The increased activity in the futures market implies that traders are hedging their holdings, gambling on Bitcoin’s short-term directional movement, or both. Derivatives trading has boosted institutional exposure to Bitcoin, but it has also become a cause of concern for spot holders.

The $6 billion in Bitcoin and Ether (ETH) expiries on Friday caused significant market friction, with some traders predicting major volatility.

The BTC price fell 13.6 % peak-to-trough during June 24-26, indicating high volatility in the latter half of the week.


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