CME Group is set to unveil for trading on May 3rd its new Micro Bitcoin Futures contract. This instrument is 1/10th the size of a traditional Bitcoin contract. Its smaller size may make it available to a much wider group of potential traders and could further popularize the cryptocurrency as a trading vehicle.
Bitcoin and other cryptocurrencies have been the topic of much speculation in recent months. Bitcoin recently hit fresh all-time highs around $60,000 per unit. The push towards new highs from a low of just under $4000 a couple years ago has renewed calls for a massive push higher. Some have even suggested that the currency could hit $1,000,000 or more in the next few years. As Bitcoin and other cryptocurrencies ascend, an increasing number of investors may look to trade currency futures as a means of speculation or hedging. The new CME contract seems to be coming at a very opportune time as Bitcoin remains near recent highs and could see another fresh leg higher any day now.
The smaller contract size could open the market for many more traders as the cost to get involved is significantly less. The lower contract amount also lessens the risk associated with it compared to the standard contract size. The micro contract may also be usable for those that trade the big contract, making it easier to scale into and out of positions.
The introduction of the new CME micro Bitcoin contract is sure to not only please investors and traders but to also attract further attention to this marketplace. A successful introduction could even pave the way for CME to introduce other crypto products down the road. As the price of Bitcoin rises, additional coins may also follow to the upside. Cryptocurrencies such as Ethereum, Litecoin and Ripple could all attract more followers and eventually have their own futures contracts also introduced to the public for trading.
Recent developments in the crypto market have driven prices higher. The purchase by Elon Musk and his electric automaker Tesla have likely been a major factor in the recent Bitcoin rise. As these forms of currency become more widely used and accepted, they will likely also become increasingly popular with speculators and hedgers. Some analysts have even suggested that cryptocurrencies could replace gold as a hedge against inflation and other geopolitical risks.
Although cryptocurrencies may yet have a long way to go towards being considered an “everyday” form of currency, they could well be on their way. Further dollar weakness and rising inflation risks could fuel further crypto upside in the meantime.
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