Ethereum Futures Are Now Trading on CME
The Chicago Mercantile Exchange (CME) has launched its much-anticipated futures contracts for ether (ETH), the native cryptocurrency of the Ethereum blockchain network.
Announced in mid-December, trading in ether futures went live late Sunday, with the February contract registering an opening price of $1,669.75. At the time, the spot price stood at around $1,600.
The Chicago-based exchange has traded 77 contracts so far, with most activity concentrated on the February expiry. The futures contracts are legal agreements to buy or sell the crypto asset at a predetermined price at a later date.
CME ether futures
CME’s ether futures are cash-settled and based on the exchange’s reference rate that includes data from major cryptocurrency exchanges Bitstamp, Coinbase, Gemini, itBit and Kraken.
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The world’s first regulated ether futures product may draw more institutional demand for the second-largest cryptocurrency by market value, boosting the recent price rally.
“The earliest traditional financial institutions that bought BTC are already looking at ETH, if not bought already. And rightfully so. The most used crypto network + future of finance + a potential deflationary monetary policy narrative make it extremely compelling,” Qiao Wang, cryptocurrencies researcher and investor and co-founder of Messari, tweeted on Sunday.
Wang foresees ether rallying to $5,000 and higher in the long run. Ether is trading near $1,632 at press time, a 1% gain on the day, having reached record highs above $1,700 on Friday.
The cryptocurrency has more than tripled in value since the CME announced plans to list futures contracts on Dec. 16, mimicking bitcoin’s surge from $6,000 to $19,783 seen in the weeks leading up to Dec. 17, 2017, when the exchange began trading bitcoin futures.
While bitcoin topped out on the same day and subsequently moved into a year-long bear market, ether is likely to remain bid. “The market is now more mature, the macro is different, and there are different players involved,” trader and analyst Alex Kruger tweeted last week, ruling out a significant crash in ether.
Wang also voiced a similar opinion Sunday, warning that betting on an ether bear market would be “the worst trade of your life.”
CME Group Launches Ethereum Futures Contracts
The Chicago Mercantile Exchange (CME) Group, a leading United States derivatives exchange, has launched the much-anticipated Ethereum futures contracts on Sunday after the initial announcement late last year.
The derivatives exchange announced on Twitter that ETH futures went live at 6 pm (Eastern Time) on Sunday “for a first trade date of Feb. 8.”
Kicking off this Sunday evening: Ether futures start trading at 6:00 p.m. ET for a first trade date of Feb. 8. https://t.co/vc2hkZf9ql — CME Group (@CMEGroup) February 7, 2021
The contracts were opened at a price of $1,669.75 when the Ethereum market price was around $1,600. The contract details on the CME website show that there will be 50 Ether on each contract, and they will be cash-settled.
Institutions need to purchase at least five contracts.
Will Ether Be Institutions’ Second Choice?
Derivatives are seen as the preferred institutional investment mode. Though many foreign exchanges are already listing ETH futures, CME is the first US exchange to list these contracts, allowing US investors to trade them.
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The listing came at a time when Ether is on a bull run, and its prices touched an all-time high.
Cryptocurrency analysts are getting more bullish on the prices of Etherum, some even predicting the prices to go up to $5,000 to $20,000 levels by the end of this year.
The earliest traditional financial institutions that bought BTC are already looking at ETH, if not bought already. And rightfully so. The most used cryptonetwork + future of finance + a potential deflationary monetary policy narrative make it extremely compelling. — Qiao Wang (@QwQiao) February 7, 2021
As derivatives are a significant financial product for any asset, we have seen its impact on Bitcoin. Cboe launched the first Bitcoin futures in the United States in December 2017, followed by CME Group. Then, Bitcoin toughed the iconic $20,000 previous peak before plummeting heavily. The cryptocurrency is now peaking at around $40,000.
Many institutions have invested heavily in Bitcoin in recent years. Now with Ethereum derivatives in the market, it is to be seen if a second digital currency can gain the trust of the institutions, despite many of its technical flaws.
Bitcoin (BTC/USD), Ethereum (ETH/USD) Outlooks - Setting Up for Fresh Highs?
Bitcoin (BTC/USD) and Ethereum (ETH/USD) Price, Analysis and Chart:
Bitcoin pulling back after weekend sell-off.
Ethereum volatile as futures launch.
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Bitcoin (BTC/USD) continues its move higher and looks likely to re-test the January 8 record high at just under $42,000. The 20- and 50-day simple moving averages have been dictating price action recently with the late-January drop below the 20-day sma halted by the 50-day sma. Last week’s break back above the shorter-dated moving average saw Bitcoin add nearly $7,000 before consolidating over the weekend. The short-term series of higher lows and higher highs remain in place and there is little in the way of resistance before the $42,000 level. Support from a cluster of recent lows all the way down to the 20-day sma, currently at $34,740.
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Bitcoin Daily Price Chart (July 2020 – February 8, 2021)
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Retail trader data show 80.48% of traders are net-long with the ratio of traders long to short at 4.12 to 1.We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may continue to fall.Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Bitcoin trading bias.
Ethereum continues to make new higher highs and higher lows and while Sunday’s sell-off was quite sharp, these remain in place for now. To continue this series, ETH/USD will need to print a fresh high above $1,764 which will then open up the big-figure resistance level at $2,000. Ethereum’s pattern of fresh high, sell-off, pull-back then another fresh high has repeated itself three times in the last month and is set to do the same again. Support seen between $1,475 and $1,507, while back above $1,700 sets-up an attempt at a new ATH. The driver for ETH/USD in the short-term is likely to be today’s launch of Ethereum futures on the CME. The second-largest cryptocurrency will join Bitcoin on the CME and will have a reference rate and real-time index available.
Ethereum Daily Price Chart (July 2020 – February 8, 2021)
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What are your views on Bitcoin (BTC) and Ethereum (ETH) – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.