By
Temitope Olatunji
April 18th, 2024
ETH gathers steam as the CME Ether Futures go live today. While the institutional action around ETH price movement has been positive, market analysts give mixed opinions on how the CME Ether Futures can affect the ETH price movement.
The much-awaited CME Ether Futures are finally live after all the excitement around. The Chicago Mercantile Exchange (CME) made an official announcement that its Ether Futures shall be available for trading with the first trade date of February 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 CME Group announced its Ether Futures launch for the first time in mid-December 2020. Since the beginning of 2021, there’s been massive institutional interest building up in Ethereum. So far in 2021, ETH has registered nearly 125% gains hitting an all-time high above $1700 levels last week.
With this news, ETH has regained the lost ground as it slipped below $1600 earlier today. However, at press time, ETH is trading at a price of $1637 with a market cap of $187 billion.
Just like its BTC counterpart, the CME ETH Futures are also cash-settled. Meaning traders won’t have to buy ETH coins in their entirety and take their custody. Besides, the contract details on the CME website show that the Ether Futures depend on the CME CF Ether-Dollar Reference Rate.
Each monthly contract represents 50 ETH with a block trade size of five contracts. The CME ETH Futures has already got a number of liquidity providers. Some of these players also provide liquidity to CME’s Bitcoin Futures and Options products. Some of the big players offering liquidity to CME ETH Futures include Galaxy, CoinShares, BlockFi, Genesis, and NYDIG. The launch of CME Ether Futures will certainly provide a boost for institutions to build other financial products around Ethereum (ETH).
JPMorgan: Ether Futures Will Have Negative Effect on ETH Price
Last week, a Bloomberg report stated that the launch of CME Ether Futures can lead to “negative price dynamics” for ETH. Nikolaos Panigirtzoglou, global market strategist with JPMorgan Chase & Co noted that ETH price has literally multiplied 8x over the last year. Also, the recent craze around DeFi has pushed the ETH price skyrocketing further.
Sharing a similar point of view, the Federal Reserve Bank of San Francisco thinks that the CME Ether Futures launch gives an opportunity for bearish investors to hedge the crypto. The bank compares the Ether Futures with the Bitcoin Futures launch in 2017. After the launch of CME Bitcoin Futures in December 2017, BTC price spiraled downwards from its all-time high. The analysis offered by the Bank states:
“The rapid run-up and subsequent fall in Bitcoin after the introduction of futures “does not appear to be a coincidence,” adding that the contracts “allowed pessimists to enter the market, which contributed to the reversal of the Bitcoin price dynamics.”
However, other market analysts are positive about the launch of CME Ether Futures. Popular crypto analyst Joseph Young believes that it’s not apt to compare the Ether Futures launch with Bitcoin’s.
Ethereum is down 15% in the past two days.
I think CME is priced in. I also think it's not apt to compare CME effect on Bitcoin in 2017 to now.
So much has changed in the past three years.
— Joseph Young (@iamjosephyoung) February 8, 2021
On the other hand, the number of ETH Coins staked with Ethereum 2.0 continues to increase every single day. The total number of staked ETH coins has reached a new all-time high.
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