According to the latest news published by major outlets, Ether (ETH) futures might start trading at CME in February 2021, representing the second cryptocurrency that could benefit from massive inflows via derivatives. After launching Bitcoin options this year, CME Group wants to continue on its path towards crypto integration and believes the second-largest cryptocurrency would be the best fit.
Ether to benefit from the futures launch?
At the beginning of December the Ethereum 2.0 implementation begun with the beacon chain, as the blockchain enters a new phase. The token had a pretty impressive performance over the past several months and it is now trading above $650 on the Kraken exchange. When Bitcoin futures were first launched in late 2017, the price had continued to rally, only to start a major bear market in 2018.
However, futures contracts mean that investors will have access to a regulated path towards ETH regardless of any short-term price fluctuations, it could be a major tailwind in the longer run. Bitcoin futures open-interest is currently estimated at $1 billion and that is very likely one of the main reasons why CME is currently considering listing ETH futures as well.
High crypto valuations good for underlying businesses
This isn’t the first time we’re dealing with a massive crypto bull run and the same as in the past, the projects behind each token are benefiting from a higher market valuation. We’ve seen recently how Genesis Block bought OMG Network, a sign that there is value in the blockchain space.
If the CME group project will end up approved, Ether futures will start trading on February 8th. Each contract will have 50 ETH tokens and will use the CME CF ether-dollar reference rate from CF Benchmarks, the crypto indices provider approved by the FCA.
Building on the success of Bitcoin futures and options, CME Group will add Ether futures to the cryptocurrency risk-management solutions available to trade in February.
Bitcoin is now trading at record highs while Ether is still down 50% from the highs reached in 2017, which means there could still be upside potential left. With the ETH 2.0 implementation and new investing vehicles available, the path for more growth is opened.
That does not mean valuations will go up in a straight line because corrections will occur. Also, it will be interesting to see if the futures launch will again coincide with a temporary high, as it did in the case of Bitcoin.