By
Temitope Olatunji
April 18th, 2024
CME Group allegedly decided to make changes to its reference rate and index tied to Ethereum. Their sources say it could mean a future tied to the crypto is coming to its marketplace.
From CME Group they announced that the companies’ experience and knowledge in bringing the Bitcoin Reference Rate and Real-Time Index to market has enabled them to launch an Ethereum-Dollar Reference Rate and Real-Time Index. As they said:
“Ether is based on formidable blockchain technology, and the CME CF Ether-Dollar rates will provide a standardized reference rate and spot price index to bring confidence to any trading strategy. Major cryptocurrency exchanges Bitstamp, Kraken, and itBit provide the pricing data to bring our dependable rate to the market.”
itBit, the exchange unit of New York fintech firm Paxos, will provide data for the two financial instruments, joining Bitstamp and Kraken. Crypto Facilities will continue to act as the administrator of the indexes, which both launched in 2018, according to the company.
From the company, they added that itBit fulfilled their conditions for being included as a participant in the indexes. The addition of itBit could show the exchange’s readiness to launch a future tied to the second-largest cryptocurrency.
The source said that he is convinced they are preparing themselves for an Ethereum future. He added:
“They have to improve the robustness of their index. Without reliable data, a cash-settled future can be easily manipulated or simply not represent the actual price of the underlying asset. It’s the implicit limitation of CME’s cash settled futures — always need market data from spot exchanges.”
From the company, they’ve answered that they are being focused on its Ether index and reference rate when asked if the move signaled futures for the cryptocurrency were on the horizon.
June Sets Records for CME Bitcoin Futures
Let’s just mention that CME’s Bitcoin futures product continued to show signs of increased popularity, with June setting a new record for open interest amid a surge of new account sign-ups.
2,960 accounts have traded CME Group’s Bitcoin (BTC) futures across all client types and time zones since the launch. In 2019 alone, there have been more than 950 new accounts created, marking a 30 percent increase in total client sign-ups.
Also, let’s not forget that Facebook’s Libra announcement came last month, that also surged up interest in crypto from traditional traders. However, its volatility makes futures a more palatable option, since they reduce risk and increase stability.
Gareth MacLeod, partner at Gryphon Labs, an open-source framework for algorithmic trading in cryptocurrency markets claims that it seems to be that the traders in the traditional finance industry started using CME to take a long position off of news about Libra.
Price of Ethereum, however, went down at the press time by 0.83% to $290.28.
The price of Bitcoin has fluctuated above and below $10,000 last week and in the time of writing it surged a bit by 1.56% to $11.397.