CME Group is on the cusp of launching its long-awaited ether (ETH) futures product. The derivatives exchange said in a Sunday morning tweet that ETH futures will go at 6 p.m. Sunday “for a first trade date of Feb. 8.”
CME’s ETH futures were announced in mid-December to much fanfare. Per contract details published on the CME website, the futures are cash-settled and based on the CME CF Ether-Dollar Reference Rate. Each monthly contract represents 50 ETH — an amount worth roughly $78,000 at press time — with a minimum block trade size of five contracts.
The CME Group website lists a range of liquidity providers for its ETH futures, some of whom also provide liquidity for the exchange’s bitcoin futures and options products. The firms providing liquidity for ETH futures include BlockFi, Galaxy, Genesis, CoinShares and NYDIG.
The launch itself represents a significant step toward the creation of financial products built around cryptocurrencies and is the first product of its kind in the United States.
Heath Tarbert, former chairman of the Commodity Futures Trading Commission, predicted in 2019 that derivatives focused on Ethereum’s native cryptocurrency would eventually hit the market. As reported at the time, Tarbert said he believed ETH falls under the definition of a commodity.
What it means for Ethereum?
For weeks, investors have been debating whether or not ETH futures will be bullish or bearish for Ethereum, especially considering the disastrous effect BTC CME Futures had on Bitcoin in 2018. ( 85% price correction)
In my opinion, the markets are in a manic, exuberant bull market stage. Investors are blindly throwing their money into anything that is parabolic, and not considering the high fees, slowed transactions, and over-valuation. Whether ETH climbs slightly higher in the short term from FOMO, and uncertainty is anyones best guess.
According to CME executives, they were used in 2017 to “tame the crypto markets”, and I think we will see a repeat for Ethereum in 2021.
This could be a “buy the rumor, sell the news” type of event, and it’s crucial investors are carefully managing their risks, and lowering exposure as tomorrow could be a volatile day in the markets.