Originally published on: October 01, 2024
The launch of the Chicago Mercantile Exchange (CME) Group’s Bitcoin Friday Futures (BFF) made waves in the crypto world, reaching a groundbreaking trading volume on its first day with over 31,498 contracts traded across two contract weeks.
On September 29, the BFF was introduced as the most successful crypto futures launch to date, with the first trade block initiated by Galaxy and Marex financial firms, making a significant impact in the market.
These new derivatives are valued at one-50th of a Bitcoin and settled in cash every Friday against the CME CF Bitcoin Reference Rate New York Variant (BRRNY), a key benchmark for BTC’s spot price. With contracts listed every Thursday at Wall Street’s closing time, traders can now easily hedge or speculate on Bitcoin price changes in the short term without the need for extended futures contracts.
According to Michael Harvey, head of franchise trading at Galaxy, these weekly contracts closely mirror spot prices, delivering a useful tool for enhancing liquidity and refining trading strategies for traders of all sizes and types. Trading desks commonly leverage futures contracts for hedging against price fluctuations or wagering on future asset prices.
In response to the escalating demand for BTC derivatives and competition from other players in the market, the CME Group introduced these bite-sized Bitcoin products in August. This move follows the launch of Bitcoin futures contracts back in 2017, initially catering to institutional traders. The CME also offers a range of other crypto-derivative products, including futures and options contracts for BTC and ETH.
Giovanni Vicioso, global head of cryptocurrency products at CME Group, highlighted the significance of the smaller contract sizes and weekly expiries in providing investors with a more accessible means to venture into the Bitcoin market while effectively managing their exposure – all within the confines of a regulated exchange.
