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US Bitcoin futures expiration sparks market volatility

By:
on Feb 23, 2024
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  • Upcoming US Bitcoin futures contracts expiry on February 23 and March 28.
  • Expiry often triggers market volatility forcing; traders to adjust positions accordingly.
  • The Bitcoin Micro contract (BAG24) expiring on February23 saw $50,955 last price, 1,293 volume on CME.

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When it comes to trading Bitcoin futures, investors have options across different exchanges. However, the two primary exchanges offering Bitcoin futures contracts are the Chicago Mercantile Exchange (CME) and ICE/US.

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ICE/US provides Bitcoin Coinbase contracts with a larger contract size of 1 Bitcoin. While the tick size is 1 point ($2.50 per contract), margin/maintenance requirements are not specified. Trading hours run from 7:00 p.m. to 5:00 p.m. (5:00 p.m. start on Sunday) CST.

On the other hand, the CME offers Bitcoin Micro contracts with a contract size of 0.1 Bitcoin and margin/maintenance requirements of $1,232/$1,120. These contracts provide traders with flexibility and liquidity, with trading hours extending from 5:00 p.m. to 4:00 p.m. (Sun-Fri) CST. The nearest expiring Bitcoin Micro contracts are the Bitcoin Micro (Feb ’24) (BAG24) expiring on February 23, 2024, and the Bitcoin Micro (Mar ’24) (BMC) expiring on March 28, 2024.

Bitcoin Micro (Feb ’24) contracts take a hit

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On the morning of February 23rd, 2024, the Bitcoin Micro (BAG24) futures on CME witnessed a significant drop, reaching $50,955, down by 2.08% or $1,085 from the previous day’s close. This downturn occurred as the futures approached their expiration date, signalling increased volatility and potentially influencing traders’ decisions.

The decline was notable within the 5-day trading window, with the contract experiencing a range between $50,575 and $53,205. The 5-day percentage change stood at -1.83%, reflecting the bearish sentiment leading up to the expiration.

CME vs. ICE/US: Bitcoin futures exchange battle

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A glance at the futures exchange landscape reveals a competitive scenario between the Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE/US). While CME’s Bitcoin Micro (BAG24) recorded a last price of $50,955 with a volume of 1,293 contracts and open interest of 13,973, ICE/US’s Bitcoin Coinbase (DNG24) stood at $51,262.50 with a trading volume of 7 contracts and no open interest.

The 5-day average volume for CME’s Bitcoin Micro futures reached 14,698, highlighting the contract’s liquidity and consistent trading activity. On the other hand, ICE/US’s Bitcoin Coinbase futures displayed a 5-day average volume of 505 contracts.

The battle between CME and ICE/US continues, with distinct contract sizes, tick values, and trading hours. CME’s 0.1 Bitcoin contract, with a tick size of 5 points ($0.50 per contract), competes against ICE/US’s 1 Bitcoin contract with a tick size of 1 point ($2.50 per contract).

As the expiration date for Bitcoin Micro futures approaches, market participants remain vigilant, navigating the dynamic landscape of cryptocurrency futures trading. The fluctuations witnessed on February 23rd underscore the impact of expiration events on both futures and spot markets, providing valuable insights for traders and analysts alike.

Bitcoin spot prices echo downtrend

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Simultaneously, the Bitcoin spot market, represented by BTCUSD, echoed the downward movement, hitting $50,853.27 with a 5-day low of $50,722.76. This decline of 1.96% further underlines the market-wide impact of the approaching futures expiration.

Comparing the two, Bitcoin Micro futures and Bitcoin spot prices on CME showed a parallel movement, emphasizing the interconnectedness of the futures and spot markets.

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