The U.S. Chicago Mercantile Exchange Group, known as CME, is the world’s leading derivatives marketplace.
Its intention to launch micro futures contracts on Bitcoin (BTC) and Ethereum (ETH) had already been revealed in the press during 2021. In 2020, Bitcoin futures had already been launched, proving its growing appeal to the sector.
Today, on March 1, 2022, the group announced on its website that options on the Micro Bitcoin and Micro Ether futures contracts would be effective as of March 28, 2022, pending regulatory review.
For the record, an option contract is a contract typically used by a trader to hedge against the risks of market fluctuations. They can be based on various underlying assets, such as bitcoin tokens of course, but also Dogecoin, provided that the platform allows for it.
These contracts will be available to institutional and professional investors as well as to individuals and will be 10 times smaller than their underlying tokens, i.e. BTC and ETH.
In addition, the volumes recorded on Bitcoin in the month of October 2021 on the CME have reached $109 billion. This is far higher than the volume recorded on Binance BTC as you can see below.
What is CME’s goal in offering such opportunities?
CME Group said the new contracts would effectively hedge fluctuating market events with more flexibility and accuracy, in addition to opening up access to the markets to new entrants.
Joshua Lim, head of derivatives at Genesis Global Group, commented that “micro options offer the targeted risk exposure that investors are looking for.
It should be noted, however, that if the future contract is based on an underlying asset that is a cryptocurrency (in this particular case, it is BTC and ETH), it remains a financial contract that does not in itself allow the holding of cryptocurrencies by its subscriber.
In any case, we can only be pleased that large international groups such as the CME are increasingly interested in this type of product to diversify, especially because it allows to inject more and more liquidity into the market.