World’s Largest Derivatives Exchange Launches Ethereum Futures
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After a long wait, Chicago Mercantile Exchange (CME) has finally delivered on their promises and launched the much-anticipated Ethereum futures contracts.
The contracts were announced back in mid-December. The contracts opened at $1,669.75, when the spot trading price was around $1,600.
Institution Floodgates To Open Up?
Since this is the world’s first regulated Ethereum futures product, it could draw more institutional demand for ETH, and push it towards the $2,000 psychological level. Qiao Wang, the co-founder of Messari - a cryptocurrency research firm, tweeted:
“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,”
According to Wang, ETH is likely going to jump till $5,000 and jump even high in the long run. As of now, Ethereum is flirting around the $1,700 psychological level. Wang also warned that betting on an Ether bear market would be the “worst trade of your life.”
Details Of The Contracts
The CME has so far traded 77 contracts with most activity focused on the February expiry. As you are probably aware, the futures are legal agreements to buy or sell an underlying asset at a predetermined price at a later date. These ether futures are cash-settled and CME’s reference rate includes data from major cryptocurrency exchanges Bitstamp, Coinbase, Gemini, itBit and Kraken. Each monthly contract is worth 50 ETH -- an amount worth roughly $85,000 at press time and has a minimum block trade size of five contracts.
Some Skepticism Still Remains
However, some elements in the market are playing a “wait and watch” approach instead of diving in. According to them, this futures launch could end up being an anticlimax. Crypto market analyst, Michaël van de Poppe tweeted:
“Personally, I'm not entering the markets at all here. Gradually taking profits have been my game recently on the swing trades through which I'm flexible in the coming weeks to come. I simply don't know how markets will react from tomorrow onwards with the CME futures.”