News-driventraderscansettargetedstrategieswithCME\'sBitcoinFridayfutures(BFF)contracts.
Theweeklyexpirylimitsbasisandcapsrollovercosts,facilitatingimprovedprofitability.
ChicagoMercantileExchange\'s(CME)bitcoin(BTC)futuresthatexpireonFridayareideallysuitedfornewstraderslookingtobetonkeyU.S.economicdatareleases,CFBenchmarks\'CEOSuiChungsaid,explainingtheperformanceoftherecentlylaunchedcontracts.
TheCMEdebutedcash-settledFridayfutures,sizedatone-50thofoneBTCwithlowermarginrequirements,onSept.30tomakethefuturesproductaccessibletoretailinvestors.Theso-calledBFFcontractsettleseveryFridayat16:00NewYorkTimeandtracksCfBenchmark\'sBitcoinReferenceRate-NewYork(BRRNY)variant.AnewcontractislistedThursdayat18:00NewYorktime,allowingmarketparticipantstotradethenearesttwoFridaysatanypointintime.
Theglobalderivativesgiantregisteredafirst-daytradingvolumeofover31,000contractsacrosstwodifferentcontractweeks,becomingtheexchange\'smostsuccessfulcryptofutureslaunchever.
\"Unlikemonthlycontracts,whichareinfluencedbyawiderangeofeventsoverfourweeks,theweeklycontractsallowinvestorstobetterexpressviewsonBitcoin\'sreactiontospecificevents,suchasU.S.macrodatareleases,\"ChungtoldCoinDeskinaninterview.
Bitcoinhasemergedasamacroassetsincethecoronavirus-inducedcrashof2020,withshort-termtraders/speculatorsmakingbetsbyfollowingnotablenewsannouncementsanddatareleaseslikethemonthlyU.S.inflationfiguresandthenonfarmpayrollsdata.
TheFridayfuturesprovideseveralbenefitstonewstraders,includinglowbasisorpricedifferentialrelativetospotprices,lowerrollovercostsandmoretargetedtradingstrategies.
Theshorterdurationlimitsthegapbetweenfuturesandspotprices,ensuringalowerpremiumthanmonthlystandardandmicrofuturescontracts.Thelowerpremiummeansthecontangobleed,orthecostincurredfrommovingpositionsfromtheimpendingexpirytothefollowingFridayexpiry,isrelativelylessthanextendeddurationcontracts,leadingtoimprovedprofitability.
\"Thereducedtimehorizonoftheweeklycontractsgenerallyresultsinalowbasiscomparedtotheirmonthlycounterparts,simplifyinganalysisforretailtraders,\"Chungsaid.
ChungaddedthatthealignmentbetweentheFridayfuturesexpiryandthedailyNAVcalculationofU.S.-listedspotETFs,mostofwhichrefertotheBRRNY,enhancesmarketliquidity.Themoreliquidity,theeasieritistoexecutelargeordersatstableprices,andthemoreefficientthepricediscoverymechanism.
Notethatonoffshoreunregulatedexchanges,retailtraderspreferperpetualfutures,whichusethefundingratemechanismtokeeppricesalignedwiththespotmarket.Thefundingfeeiscollectedfromtraderseveryeighthours.Theseratesarevolatile,addinganelementofuncertaintyandunpredictability.
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