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All About Micro Bitcoin Futures

The crypto buzz today is all about Micro Bitcoin Futures. So, what’s Micro Bitcoin Futures? Here we go: Micro Bitcoin Futures (MBT) is a contract the size of 1/50th of the market value of 1 BitCoin (BTC) settled at 1/10th profit margin by cash with the CME Group. This provides a great opportunity for small business owners and small-scale traders to buy BTC without owning actual BTC. These MBT contracts are fully regulated and help provide the traders with proper insights into the risks involved in the price volatility of BitCoin.

Micro BitCoin Futures Statistics

Contract Unit0.10 BTC
SymbolCME Globex: MBT
Settlement MethodCash
Contract Duration12 months
Minimum FluctuationOutrights $5/BTC = $0.50/MBT; Spreads $1/BTC = $0.10/MBT
Price Limit/CircuitPrice Limits
Trading HoursCME Globex: Sunday to Friday (5 – 4) pm CT

When Did Micro Bitcoin Futures Get Launched?

On March 28, 2022, both Micro Bitcoin Futures and Micro Ether Futures were opened for trading options to the world by CME Globex.

Key Points of Interest

  • Due to the limited supply of BTC, the Bitcoin futures contract was introduced in the year 2017, which allowed traders to own BTC without actually mining a real one. But one Bitcoin futures contract represents 5 BTC which is quite expensive as per the current market value. Thanks to Micro Bitcoin Futures, smaller contracts at a fraction of 1/50th of the fluctuation rate are now available, regulated by the CME CF Bitcoin Reference Rate (BRR).
  • Trading on a regulated exchange allows traders to observe the price discovery of explicit futures keeping all the participants quoted at the same prices. This gives traders precise exposure to BTC and enables them to make fair comparisons.
  • Potential margin offsets can be efficiently managed through such futures contracts providing efficient use of capital in crypto trading.
  • Micro Bitcoin Futures trading markets are open nearly 23 hours each day for 6 days a week, providing convenient access to the market price swings.
  • Liquidity is one of the key elements in computing market opportunities and is a core expression of trading sentiments. The more the liquidity of a market, the better the chances for a buyer to find a seller and vice versa. MBT futures market offers deep liquidity markets, which makes trading that much more efficient.

How Does Movements In MBT Work?

Based on the CME CF BRR, the Micro Bitcoin Futures have a minimum price fluctuation tick size of $5. This means that for every $5 increase or decrease in the actual market price of BTC, the MBT contract price moves 1 tick up or down.

MBT Futures Security

CME Clearing regulates, scrutinises, and keeps backup of each trade in the futures market to ensure its integrity. Following certain safety tips to follow before, after, and during trading, might further reduce risks. There are a certain set of Exchange rules for every participating trader to follow as mandatory.

Making Money With Micro Bitcoin Futures

Investors are able to do trading in MBT futures at a marginal cost of 10% of the value of a bigger contract to own as well as control the rights to sell them till the contract expires. The best advantage of margins is that they not only multiply profits but also make it possible for traders to risk money they can’t afford to lose. This method is known as using leverage and it can magnify the effect of price changes. So, the risks involved are greater and one needs to undertake a proper analysis of the market prediction statistics before investing.

Use of Hedge Strategy

In simple terms, a hedge is a method of investment where a particular price margin is locked before trading, reducing the risks involved. For example, when you try to book a train ticket for a certain date, even before getting a confirmed status on the reservation, the purchase is locked at a specific price (say Rs 500). When the reservation is confirmed, even if the market price of the ticket rises to Rs 550, you would still pay only Rs 500, i.e., the amount previously agreed to. Similarly, it doesn’t matter if the price of BTC rises or falls in the meantime. You can sell the MBT futures at only the price you agreed to pay before investing.

Conclusion

Micro Bitcoin Futures contracts are invented to reduce investment risks for all classes of traders.  Want to trade or invest in Micro Bitcoin Futures? Wait no more. Start trading at Zebpay today!

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