(Bloomberg) — CME Group Inc. is launching a smaller Bitcoin futures contract in a bid to appeal to retail investors who may be priced out of the exchange’s existing crypto offerings.
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The weekly futures contracts, dubbed Bitcoin Friday futures, will be priced at one-50th the size of one Bitcoin, meaning that investors won’t need to shelve out as much as they do when buying current offerings. The cash-settled product will be available starting Sept. 30, pending regulatory review, according to the Chicago-based company. Bitcoin was recently trading at around $62,500.
“When you look at, say, a retail individual, active trader, they’re looking for something smaller,” said Giovanni Vicioso, CME Group global head of cryptocurrency products.
CME already offers Bitcoin and Ether futures as well as “micro” versions of each, sized at a 10th of each coin. Those launched in 2021. Meanwhile, volumes for CME’s micro-Bitcoin futures are up about 200% this year compared with 2023’s levels, which suggests that there’s been a rise in retail interest, said Vicioso.
But as the price of Bitcoin has risen, even the smaller micro Bitcoin offering has become inaccessible to some looking for a less expensive option to invest.
Bitcoin rallied 157% last year thanks, in part, to anticipation over the debut of exchange-traded funds that hold the cryptocurrency directly. Such funds launched in January and have had a banner trading start — they’ve garnered net inflows of roughly $18 billion, data compiled by Bloomberg show. So far this year, Bitcoin has gained another 50%.
“Certainly introducing that smaller-sized contract will make that contract a little bit more tradeable, more accessible for a larger swath of retail participants,” Vicioso said. “It’s going to require a smaller capital outlay to get exposure. That was one of the driving forces behind this — it was really size.”
Here’s a hypothetical scenario of how much it could cost: one BFF contract gives an investor exposure to one-50th of Bitcoin, which equals to around $1,200 currently. But that investor wouldn’t necessarily need to pay that much upfront, but would, instead, be able to post around $300 in margin to get the full exposure.
CME is calling the tiny contracts “BFF,” which stands for Bitcoin Friday futures, but in everyday parlance also means “best friend forever.” The new BFF contract will list every Thursday night New York-time for a Friday trade date; investors will be able to trade the nearest two Fridays at any given point. The Friday expiry should allow the contracts to more closely track the spot price of Bitcoin, CME says. Cryptocurrencies trade around the clock, 24 hours a day, seven days a week.
“When you consider a product that we’re launching that should have retail appeal, I personally love that BFF moniker,“ said Vicioso.
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