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Are Micro Bitcoin Futures for You?

| March 8, 2024 | By

The past two years have been big for cryptocurrencies, specifically Bitcoin (BTC). Amid the epic COVID-19 era run-up in crypto values, Bitcoin futures listed on the Chicago Mercantile Exchange (CME) experienced an uptick in public interest. To broaden its Bitcoin offerings, CME Group launched Micro BTC futures in May 2021.

CME Micro Bitcoin Futures: Form and Function

If you’re a retail trader, then you know how important it is to get the most out of your money. That’s where reduced-size futures come in―they help traders maximize capital efficiency. When it comes to trading BTC, CME Group’s Micro Bitcoin futures contract gives participants the ability to fully customize their risk profile and exposure to the markets.

Since the inception of BTC futures, the single greatest challenge that independent retail traders have faced when trading them is the large capital requirements. It’s no secret that trading full-sized BTC futures is expensive. These contract specs give us a good idea of how much money it takes to participate:

Contract Tick Value Intraday Margin Overnight Margin
Bitcoin (BTC) $25 $81,345 $81,345

Margin values are courtesy of Gain Capital and are subject to change with market conditions.

As you can see, the full-sized CME BTC futures contract is designed for well-capitalized or institutional traders. With a per tick value of $25 and margins upwards of $80,000 per contract, it’s safe to say that standard Bitcoin futures are financially cumbersome.

Fortunately for active retail traders, CME Group created the Micro BTC contract. At one-tenth the size of one Bitcoin (0.10), Micro Bitcoin futures give participants the flexibility to trade as they deem fit. Here’s an overview of the key specs:

Contract Tick Value Intraday Margin Overnight Margin
Micro Bitcoin (MBT) $0.50 $1,628 $1,628

Margin values are courtesy of Gain Capital and are subject to change with market conditions.

For most retail traders, the Micro BTC futures contract is a much better fit than its full-sized counterpart. First, Micro BTC margin requirements are only a fraction of the standard futures issue. Second, the contract’s dramatic size reduction creates a manageable tick value.

Taken together, these factors offer active crypto traders a collection of unique advantages, including:

  • Providing strategic freedom: The reduced margins make it possible to maintain short, intermediate, and long-term positions in the market. This attribute opens the door to countless day, swing, and long-term strategies.
  • Making volatility manageable: BTC is notorious for its volatility. The small tick value of the micro contract lets the trader manage the ebbs and flows of the market.
  • Maintaining solvency: The smaller tick value and margin requirements of Micro Bitcoin limit the trader’s exposure to the market. In doing so, unfortunate events—such as margin calls and premature position liquidations—may be avoided.

Without a doubt, the cryptocurrency markets are among the most turbulent trading environments in the world. Bitcoin is no different. Rumors, cyberattacks, fraud, and governmental regulations can sway valuations on a dime. However, with Micro Bitcoin futures, a trader can aggressively manage risk and capitalize on the frequent volatility. No matter your stance toward Bitcoin, you’re free to trade your opinions and cash in with a multitude of bullish or bearish strategies.

Are Micro Bitcoin Futures Right for You?

Pragmatically, you can use several methods to trade Bitcoin. In the U.S., you can purchase BTC directly through cryptocurrency exchanges, invest in crypto companies, or trade BTC futures. Traders outside of the U.S. have the added options of engaging Bitcoin contract-for-difference (CFD) products and exchange-traded funds (ETFs). However, when it comes to trading BTC through a licensed and regulated exchange, CME Micro Bitcoin futures are a truly unique product.

If you’re interested in engaging Bitcoin in a safe, secure fashion, then CME Micro Bitcoin futures may be a viable choice for you. To learn more about current pricing and availability, contact a futures market pro at StoneX today.

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