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Michael Creadon joins Anthony Crudele to discuss Benefits of Using Bitcoin Futures and comparisons to Bitcoin Spot.
CME’s Bitcoin futures contract, ticker symbol BTC, is a USD cash-settled contract based on the CME CF Bitcoin Reference Rate (BRR), which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin. The BRR aggregates the trade flow of major bitcoin spot exchanges during a one-hour calculation window into the U.S. dollar price of one bitcoin as of 4 p.m. London Time.
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The Bitcoin futures contract trades Sunday through Friday, from 5 p.m. to 4 p.m. Central Time (CT).
A single BTC contract has a value of five times the value of the BRR Index and is quoted in U.S. dollars per one bitcoin. The tick increments are quoted in multiples of $5 per bitcoin, meaning a one-tick move of the BTC future is equal to $25.
BTC futures are block trade eligible with a minimum quantity threshold of five contracts.
BTC futures expire the last Friday of the month, and are listed on the nearest two months in the quarterly cycle plus the nearest two months not in the quarterly cycle.
Example
Assume the active contract months are December and March in the quarterly cycle. And January and February as the nearest two non-quarterly months.
As the December contract expires, the June contract becomes active as the next month in the quarterly cycle.
As the January contract expires, the April contract becomes active.
This process continues throughout each year.
Conclusion
Bitcoin is a large portion of the growing digital asset market. BTC futures provide investors with transparency, price discovery and risk management capabilities. The contract will also allow individual market participants to access the bitcoin market as well as hedge any direct exposure to bitcoin pricing.
Information in this post came from CME Group.
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