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CME Micro Bitcoin futures exceed 1M contracts as institutional speculation increases

In May, the Chicago-based derivatives market introduced its Micro Bitcoin futures product. This provides investors with smaller positioning opportunities.

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CME Micro Bitcoin futures exceed 1M contracts as institutional speculation increases

The second quarter saw institutional exposure to cryptocurrency via derivatives continue to grow. CME Group's new Bitcoin ( BTC ) micro contract experienced a significant uptake in its first two trading months.

CME's Micro Bitcoin futures contract, which was launched on May 3 has already exceeded 1 million contracts traded, according to Chicago-based derivatives exchange. CME executive Tim McCourt stated that the product is popular with day traders and institutions looking to hedge their spot Bitcoin price risks.

The micro contract, which is denominated at 0.01 BTC, is only one-tenth of the size of one Bitcoin. CME's main Bitcoin futures unit is 5 BTC.

Brooks Dudley, global head of digital assets for ED&F Man capital markets, stated that "We have seen more institutional volumes than we expected, which proves that the timing was right to a smaller Bitcoin contract."

According to CoinShares data, institutions have decreased their long-term exposure Bitcoin or other cryptocurrencies in the recent correction. There were outflows of $79 million last week. BTC is a case in point. Long-term holders are grabbing up newly liquidated coins to increase their long-term investment prospects.

There is more activity in the derivatives markets, which suggests that traders are hedging positions and speculating about the short-term direction of Bitcoin or both. While derivatives trading has increased institutional exposure, it has also created stress for spot owners. Cointelegraph reported that Friday's expiry of $6 billion in Bitcoin and Ether, (ETH), created significant friction in the market with traders anticipating extreme volatility.

The week's second half saw high volatility, with the BTC price dropping 13.6% peak to trough between June 24 and 26.

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