What are bitcoin futures?

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.

Where does Bakkt store bitcoin?

All the Bitcoin used to back the trades is stored in Bakkt's secure custody. Bakkt is owned by the Intercontinental Exchange. Image: Shutterstock. So, Bakkt looks after the Bitcoin on behalf of ICE, which enables institutional investors to speculate on it in the form of futures trading.

How do BTC futures work?

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.

Why do bitcoin futures traders use leverage?

Because each Bitcoin futures contract represents 5 BTC, there is inherent leverage in the Bitcoin futures market. Bitcoin futures traders often use that leverage to speculate on short-term swings in the market in an attempt to generate large returns on relatively small upfront investments.