CME Group to launch Ether futures in early 2021

IN BRIEF

  • The CME Group, the world’s largest financial derivatives exchange, will launch Ether futures in early 2020.
  • This follows the success of its Bitcoin futures contracts, which are trading with an average daily volume of more than $880 million.
  • This offer will be available to all of CME Group’s institutional investor clients.

The CME Group, a global markets company and the world’s largest financial derivatives exchange, announced that it will launch Ether futures contracts (or „futures“) for institutional traders.

This initiative will allow major players to gain exposure to the Ethereum network. Once the exchange has received regulatory approval, it will allow trading of Ethereum’s futures contracts starting in February 2021, only a few months away.

This will be the Chicago Mercantile Exchange Group’s second foray into trading cryptomoney futures contracts. This emerging asset class is only a small fraction of its offerings, which generated nearly $5 billion in revenues in 2019.

Most people remember how Bitcoin peaked in 2017, the exact day that GCE’s $BTC futures contracts were launched, and collapsed just afterwards. They forget that the launch of the CME raised the price from $6,000 to $20,000, an increase of 225% in 2.5 months. The launch of the CME futures contract in $ETH is extremely bullish.

Growing involvement in crypto

The CME Group also offers its customers the possibility to trade Bitcoin futures, which have been very popular. Tim McCourt, the company’s global head of equity indices and alternative investment products, explained :

With increased customer demand and the strong growth of our Bitcoin futures and options markets, we believe that the addition of Ether futures will provide our customers with a valuable tool to trade and hedge this growing cryptography.

Since the beginning of the year, the equivalent of 42,800 Bitcoins, with a current value of more than $880 million, are traded on average every day via the group’s Bitcoin futures platform.

Mr. McCourt continued :

Ethereum is the second largest cryptomoney in terms of market capitalization and daily volume. The introduction of Ether-listed futures contracts on our regulated and proven CME Group derivatives market will help to create a forward curve so that Ethereum market participants can better manage price risk.

Important news for Ethereum?

As the world’s largest financial derivatives exchange, the addition of CME will likely increase institutional investors‘ exposure to Ethereum.

As its futures business on Bitcoin continues to grow, the CME Group probably hopes that a similar alternative in Ethereum will attract the interest of its customers.

With the upcoming release of CME’s $ETH futures, you can expect that institutions will be able to assume or deepen their ETH exposure.

Some may even choose to opt for staking now, when they can cover their exposure.

The liquidity valves for $ETH are about to open.

The DeFi card

Ethereum is still in its first month of migration from ETH 1.0 to ETH 2.0, and other adoptions seem to be on the horizon.

With the move from proof of work (PoW) to proof of issue (PoS), Ethereum should validate transactions faster and at lower cost. In addition, decentralized finance (DeFi), which is mainly built via applications on the Ethereum blockchain, took off in 2020.

With more than $15 billion of total blocked value (TVL), Ethereum sees a growing number of users flocking to its decentralized applications (dApps). Beyond the technical and fundamental advances, the addition of an institutional-quality solution in the long term augurs well for further growth of the network.