The Chicago Mercantile Exchange (CME) has hit a new peak. Just one month after launching its new bitcoin micro futures, the company has seen approximately one million of these contracts traded, suggesting that institutional investing in the bitcoin space has not died down since the currency began experiencing heavy losses from its mid-April high.
The CME Has Struck a Top Chord
CME put out the following message on Twitter:
Today, we announced a new milestone for micro bitcoin futures: one million contracts have been traded in just 38 days since launch, indicating strong interest in the smaller-sized contract designed to provide greater precision in managing bitcoin exposure.
The purpose of the micro bitcoin futures contract is to give a trader limited exposure to bitcoin so that they are not as affected by the currency’s volatility. Bitcoin, as we have all seen, is extremely vulnerable to price fluctuations that can cause it to move up and down fast and without a moment’s notice.
One of the most devastating drops to ever occur within the space took place only a month ago after the world’s number one digital asset struck a new high of approximately $64,000 per unit. However, after only a few weeks, the currency had dropped to nearly half that figure.
By providing micro futures contracts, traders can get enough exposure to bitcoin without experiencing all the risk associated with it. This option has clearly proven popular given how many contracts have been traded in the last five weeks. Most micro futures contracts are worth only about one-tenth the size of a normally priced bitcoin.
Tim McCourt – the global head of equity with CME – stated in an interview that the micro contract has proven quite popular amongst both institutional players and smaller retail traders. Many times, these contracts are seen as hedge tools against hardcore risk, while Brooks Dudley – the global head of digital assets at ED&F Man Capital Markets – says he is not surprised by the news.
Over the past year, he says that institutional interest in bitcoin and cryptocurrencies has gone through the roof, and that micro futures have arrived at the perfect time. Many of these institutions are not necessarily looking to jump into a new asset space headfirst, and smaller contract options allow them the chance to get a taste for bitcoin and decide if it is something they would want to continue with in the future.
Institutions Are Staying Involved
We have seen more institutional volume than we anticipated, which shows that the timing was right for a smaller bitcoin contract.
Not long ago, bitcoin experienced another heavy dip that caused the currency to fall below the $30,000 mark, though at press time, the currency has shot up by about $5,000 and is now trading for just over $34,000 per unit.