- CME Group opened its doors to the highly anticipated Ethereum futures after the ETH futures contract went live on February 8 at 18:00 for the first trade. According to the website, futures were opened at $ 1604 and the real-time index was now around $ 1700.
CME Group opened its doors to the highly anticipated Ethereum futures after the ETH futures contract went live on February 8 at 18:00 for the first trade. According to the website, futures were opened at $ 1604 and the real-time index was now around $ 1700.
CME futures are paid in cash and are based on the CME CF-Ether-Dollar Reference Rate. Monthly contracts represent 50 ETH and the minimum block transaction size is 5 contracts.
After the announcement in mid-December, the collective market took off, and ETH picked up tremendous momentum in early 2021. Now, after the launch, the community has responded positively en masse.
— Cole Kennelly σ🦄 (@ColeGotTweets) February 7, 2021
As seen, popular Crypto advocates such as Chris Burniske and CEO of Three Arrows Capital Su Zhu are indicative of a bullish scenario for Ethereum after the launch of futures. The rationale behind their emotions and the collective positivity in the introduction of the ETH contract makes sense. CME is one of the most important gateways for institutional investors to expose to crypto risk, and this could be a huge boost for Ethereum.
Currently, the disadvantages associated with the launch of futures are difficult to identify, but a case can be made for immediate impact and final price valuation of the asset against the organic increase in interest.
If you sold your $ETH before CME launch, don't worry about it–it's in much safer hands now.
— Su Zhu (@zhusu) February 8, 2021
Ethereum Futures effect will be translated but in the long run
Now, recognition by CME is still an extremely positive move for Ethereum as it allows the asset to reach more hands, especially at the corporate edge. However, at the end of the day, it is a cash-paid contract where the exchange and traders exchange not exactly Ether, but equity capital for ETH.
It is also important to note that Bitcoin Future saw a huge drop 3 weeks after the CME was launched, and currently Ethereum may face an interesting drop in terms of gas fees.
Eric Wall recently predicted that with Ethereum gas fees rising and becoming
unattainable in the market, smaller networks like Cardano, TRON, with lower gas fees, could absorb some of their traffic. This can lead to a large shift in transaction volume, but it is important to consider the higher correlation between Ethereum and these assets. The correlation between ETH and its direct competitor remains around 0.65-0.72 which is quite high.
Verdict: Short Term or Long Term?
In the current market scenario, the response is unpredictable and given that Ethereum is under price discovery, the short-term bullish effect may appear on the charts. However, the long-term appreciation will certainly be positive for Ethereum. Exposure to corporate customers through CME is important, and appreciation will come over time, just as with Bitcoin.