Bitcoin Friday futures are our smallest, shorter-dated and most accessible Bitcoin product to date.
What are Bitcoin Friday futures?
Bitcoin Friday futures (ticker: BFF) are weekly, USD-settled contracts that offer a more precise way to gain bitcoin exposure and manage risk relating to such exposure. Each contract represents 1/50 (0.02) of a bitcoin, ensuring capital efficiency and accessibility. These shorter-dated contracts expire to the CME CF Bitcoin Reference Rate New York Variant (BRRNY) every Friday at 4:00 p.m. New York time and may track the spot price of bitcoin more closely.
Similar to its two larger-sized best friends, Bitcoin futures (BTC) and Micro Bitcoin futures (MBT), BFF gives full exposure to bitcoin’s price performance without directly owning it. Indirect exposure means not having to worry where or how to hold the physical position for example, no need to establish wallets, obtain insurance or suffer losses to the physical position from hacking.
Futures contracts traditionally expire on a monthly or quarterly basis, such as BTC and MBT, whereas BFF will settle weekly every Friday. Because of this shorter duration, BFF will have a shorter cost of carry resulting in a price that may more closely track bitcoin’s spot price.
At least two consecutive Fridays will be listed at any time. A new BFF contract will be listed every Thursday at 6:00 p.m. New York time such that market participants will be able to trade the nearest Friday plus the next two Fridays giving traders the choice to hold or not hold exposure over the weekend depending on their preference.
Who is BFF for?
If you are looking for long-term commitment, MBT and BTC expire monthly with longer-dated listings. If you are anticipating short-dated market movements and seeking to mitigate weekend risk, BFF is your contract.
Given the shorter duration and smaller-sized contract, Bitcoin Friday futures will offer both active individual traders and institutional investors a new, flexible, innovative, capital efficient and more granular way to gain exposure to bitcoin or even test new strategies. All while effectively managing existing product portfolios and capturing new trading strategies. And, because they’re trading on a platform regulated by the CFTC, there’s an added layer of transparency and security.
How do Bitcoin Friday futures reduce upfront capital commitment for investors?
BFF allows for the most precise trading with the smallest required capital. Larger exposure can be gained with MBT or BTC.
Even with some recent market turbulence, the price of bitcoin has risen close to 50% YTD on top of more than doubling in 2023. At these elevated price levels, our existing suite of products, such as BTC (5 bitcoin multiplier) and MBT (0.10 bitcoin multiplier), can become inaccessible for some market participants.
BFF, our smallest bitcoin futures yet, offers exposure to 0.02 bitcoin, currently valued at around $1,200, reducing the financial commitment required to get bitcoin exposure. However, unlike spot purchases where the position needs to be fully funded upfront, futures investors would only be required to deposit a percentage of the contract’s value or margin to secure the position. As the table below demonstrates, at current market levels, investors would need to post around $300 in margin to gain the full exposure.
| Bitcoin Friday futures (BFF) | Micro Bitcoin futures (MBT) | Bitcoin futures (BTC) | |
|---|---|---|---|
| Contract Size | 0.02 Bitcoin | 0.10 Bitcoin | 5 Bitcoin |
| Approximate Notional Value* | $1,300 | $6,400 | $320,000 |
| Exchange Minimum Margin Requirement** | 24% of prior day’s contract settlement value | ||
| Approximate Margin** | $300 | $1,500 | $76,000 |
*Prices accurate as of September 24, 2024
**Subject to change and your clearing firm may require greater margin
When do Bitcoin Friday futures settle?
These Weekly futures contracts will settle every Friday at 4:00 p.m. New York time to the Bitcoin Reference Rate New York Variant (BRRNY).
The BRRNY is the benchmark used by six out of the 10 new spot bitcoin exchange-traded funds (ETFs) that hold bitcoin directly. Since the launch of these popular ETFs, volume for BTC and MBT has increased in the hour leading to 4:00 p.m. New York time where now more than 20% of a day’s notional volume is transacted.
The new BFF contract will allow traders to benefit from growing liquidity and the ability to capture market moves more efficiently during U.S. hours.
What is the BRRNY?
The BRRNY represents the aggregated, executed U.S. dollar trade flow of bitcoin from major cryptocurrency spot exchanges between 3:00 p.m. and 4:00 p.m. New York time. The BRRNY is calculated by CF Benchmarks Ltd, a benchmark administrator authorized by the UK FCA under the regulatory supervision of the UK Financial Conduct Authority and is published daily at 4:00 p.m. New York time.
Why trade a Weekly expiry?
BFF contracts may be especially useful to position portfolios for short term catalysts that may affect the price of bitcoin, such as global interest rate decisions, CPI numbers, geopolitical events or crypto-specific catalysts. For example, if an investor believes the price of bitcoin will change based on such catalysts, they could easily manage the risk/exposure by trading BFF contracts. Given their shorter duration, BFF may trade closer to bitcoin’s spot price compared to its monthly counterparts. BFF offers investors greater flexibility, choice and granularity to help both individual and institutional investors capture trading opportunities, gain access to bitcoin and better manage its risk in a more capital efficient manner compared to other alternatives.
Find out more about Bitcoin Friday futures and start trading today.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
