What Are Bitcoin Friday Futures (BFFs)?

The Chicago Mercantile Exchange (CME) Group is set to introduce Bitcoin Friday Futures (BFFs) on September 30, responding to rising interest in cryptocurrency futures among retail investors. According to an announcement made on August 27, these new futures contracts will represent one-fiftieth of a Bitcoin, making them smaller than existing retail-oriented Bitcoin futures products, such as Coinbase’s “nano” Bitcoin futures, which are priced at one-hundredth of a Bitcoin.

These contracts will be cash-settled every Friday based on the CME CF Bitcoin Reference Rate New York Variant (BRRNY), a key benchmark for Bitcoin’s spot price. Giovanni Vicioso, CME Group’s global head of cryptocurrency products, stated, “With these weekly expiring, smaller-sized contracts, investors from institutions to active retail traders will be able to fine-tune their Bitcoin exposure more precisely on a regulated exchange.” He also noted that settling to the BRRNY, the same benchmark used by leading Bitcoin ETFs, will enhance liquidity and allow traders to better capture market movements during U.S. trading hours.

The BFF contracts will be listed every Thursday at 6 p.m. EDT/EST for trading the following Friday. Market participants will be able to trade the nearest two Fridays at any time. The contracts are cash-settled to the BRRNY at 4 p.m. EDT every Friday.

Steve Sanders, EVP of marketing and product development at Interactive Brokers, commented, “We are excited to support CME Group’s introduction of these new weekly Bitcoin futures contracts. The smaller contract size and shorter duration offer a flexible, low-cost solution for managing Bitcoin exposure and expanding trading strategies for our clients.”

Bitcoin futures are gaining popularity in the U.S., with open interest on CME Bitcoin futures nearing 30,000 contracts as of August 20. Each CME Bitcoin futures contract is currently sized at 5 BTC. CME faces competition from other platforms like Coinbase Derivatives, which provides futures for Bitcoin, Ether, and alternative cryptocurrencies such as Litecoin and Dogecoin.

Futures contracts are essential for hedging strategies used by institutional investors and are also popular among traders for speculation due to their leverage capabilities. Tanmay Sheth, director of futures at Webull, noted, “Bitcoin Friday futures will offer global traders a cost-effective way to gain Bitcoin exposure, manage their portfolios, and explore new trading strategies.”

Other cryptocurrency derivatives, including options, are expected to debut on U.S. exchanges soon.

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