What are Micro Bitcoin Futures (MBT)?
Bitcoin futures were created in response to the growing popularity of the crypto currency. These futures contracts allow you to gain exposure to one of the fastest growing cryptocurrencies in the world. Much like the indices, the micro contracts are an offshoot of the larger futures bitcoin contract offered by the CME group. A single micro bitcoin futures contract is 1/10th the size of a single bitcoin and 1/50 of the larger bitcoin futures contract – 1 tick of the MBT is $0.50 or 5 index points. A contract of this type allows traders to speculate on the future price of bitcoin. The smaller size contracts allow them to be more accessible and provide more benefits for traders with smaller accounts.
Micro Bitcoin (MBC) is a relatively new cryptocurrency, having been launched in late 2020. It is a peer-to-peer digital currency, like Bitcoin, but with a much smaller market cap. It is designed to be easily accessible by all users and to offer low transaction fees. The current price of Micro Bitcoin is around $0.0023 per coin, with a market capitalization of $1.7 million. This makes it a very affordable cryptocurrency to invest in. The total supply of MBC is limited to 10 billion coins, with a block time of just 2 minutes. This makes it a great option for those looking to invest in a fast and secure cryptocurrency.
Micro Bitcoin Futures Highlights
A micro bitcoin contract is affordable, starting at $0.50 a tick. Any account can effectively trade with this contract. Trades on an exchange also are much more transparent, providing better liquidity than traditional crypto currency exchanges. Micro bitcoin contracts are also very flexible. At 1/10 the price of a single bitcoin, they give retail traders with small or medium accounts a way to gain exposure and trade bitcoin futures with multiple contracts. This low-cost and flexibility makes a low margin requirement so smaller accounts can participate in trading MBT. In addition, these contracts offer the potential for greater levels of leverage, allowing traders to reap the benefits of volatility.
Micro bitcoin futures can also be used by experienced traders to hedge their portfolios. The small size of the contract makes it a good choice for hedging positions in larger bitcoin positions. This hedging strategy can also be used to lock in profits or reduce risk in a portfolio. As the contract is so small, traders can take advantage of its low margin requirements to hold a position in the market without having to deposit much capital. Overall, the micro bitcoin contract provides a great opportunity for traders to gain exposure to the bitcoin market without the need to invest much capital. This low-cost and flexible option allows traders to take advantage of volatility and the potential for greater levels of leverage. It also provides a great hedging strategy for experienced traders looking to lock in profits or reduce risk.
What moves the price of Bitcoin
Bitcoin is unique in that as a cryptocurrency in that the product has to be “mined” by computers. Mining bit coin is time consuming and expensive and there is currently a cap of 21-million-bit coins that can exist. Being a new currency, the value of bitcoin increases with usage, the more commonly accepted bitcoins are the value should increase. Just like with commodities supply and demand is a major factor of bitcoin price movement. Estimates suggest 1 bitcoin is made every 10 minutes. Bitcoin and cryptocurrency in general is still in its early stages and is purely driven by how accepted and used it is. With this in mind, here are some factors you’ll want to watch out for and keep track of when trading bitcoin futures.
Cryptocurrency is notoriously volatile as its still a relatively new market. Media Coverage plays a vital role in how crypto currency markets run. Major news painting bitcoin either positively or negatively can have a stronger than normal effect on bitcoins. This coverage can effect the Acceptance of bitcoin. The more a cryptocurrency is accepted and normalized, the more stable the price will be. As major companies start to accept bitcoin, we can look forward to price growing.
The Availability will also have a heavy effect on the market. The Federal Reserve releases a report monthly on the industrial production. This includes the raw amount of goods produced by industrial methods; such as factories or mines. The Feds will watch closely as it's an early sign of how the economy is doing in response to cryptocurrency. As mentioned earlier, there is a known cap of 21 million. This will factor in Supply and Demand of crypto currency. Once the cap is reached, the supply of bitcoin will become exhausted and prices will lower. At the time of writing, around 3 million bitcoins are waiting to be mined. Like commodities, the difference between supply and demand has a huge impact on price.
The final factor you'll want to keep track of is Regulations. Right now transactions made in bitcoins are very difficult to trace. As crypto currency becomes more accepted governments will be sure to step in and impose regulations on the currency. If you plan to trade bitcoins always watch for mentions of regulations or reports that the government is looking into crypto.
Conclusion
CME group’s micro bitcoin contracts trade Sunday-Friday 5:00 pm – 4:pm central time. Unlike trading the indices or commodities, the price of bitcoins can be skittish. Cryptocurrencies can be heavily influenced by media coverage and public perception so traders holding a position in the micro bitcoin futures markets will have to be aware not just of planned government regulations, but for any reports coming from major news sources.
The good news is at $0.50 a tick the micro bitcoin contract should give traders plenty of room to breath and hold position, even with a small account size. It provides an ideal way to test out strategies and experiment with different trading methods without having to commit too much capital. This could prove beneficial for those learning the ropes of trading or those wanting to test out a new strategy without risking too much. In conclusion, the micro Bitcoin contract is a great way to access the cryptocurrency market without having to commit too much money.
Micro Bitcoin Links
CME Group: For a look into changes in the micro bitcoin market.
CoinMarketCap: For news and live data in regard to Micro Bitcoin
Investing: A chart with a live chart of all popular crypto currency markets.
Micro Bitcoin Calculator: Track the price of micro bitcoin