CME Ethereum futures launch and how it is affected

CME Ethereum futures launch and how it is affected

Analyze Event
February 16, 2021 by Delnia
482
Investors are nervous that this week’s CME Ethereum futures launch will be a repeat of Bitcoin’s 2017 CME Ethereum futures launch but data suggests otherwise.
CME Ethereum futures launch and how it is affected

What is Bitcoin (BTC) Futures?

Bitcoin (BTC) futures permit investors to gain an offering to Bitcoin (BTC) without having to hold the fundamental Cryptocurrency. Like a futures contract for a product or stock index. Bitcoin (BTC) futures permit investors to speculate on the future price of Bitcoin (BTC). The Chicago Mercantile Exchange (CME) offers month-to-month contracts for a cash settlement.

Meaning investors receive cash instead of physical delivery of Bitcoin (BTC) upon settlement of the contract.

The Chicago Board Options Exchange (CBOE) announced the first-ever Bitcoin (BTC) contract on December 10, 2017, and ceased offering new contracts in March 2019.3 4 The CME Ethereum futures opened its Bitcoin futures stage on December 18, 2017.5 In addition to futures, it presently offers options on Bitcoin futures.

BTC CME Ethereum futures

Bitcoin (BTC) horrifying December 2017 futures launch quickly fell brief of investors expectations and even even though the CME BTC market has surpassed $2.5 billion in open interest, the starting launch has reinforced the account that this week’s CME Ethereum futures launch will be equally bearish in the short term.

before the CME BTC futures launch, Bitcoin (BTC) had already attracted 1,900% for the year, a rally which several analysts argue was gained by the expectation of regulated futures. At the moment which the CME Ethereum futures have launched in the market, investors are observing closely to see whether Ether (ETH) will end up in the same place as it has already gained 600% over the past year.

Until this date, there is no way to measure how Bitcoin (BTC) would have ended up without the lunch of the CME and CBOE futures. Needless to say, traders still tend to get to the CME Ethereum futures launch to the 70% crash in BTC price that happened in the first 3 months following the launch.

What is the CME Ethereum project?

BTC run had pointed out a new all-time high, spotted around $49K on valentine’s day. This led to another rush of investors to buying below $50K and not to be left behind. These actions draw the most attention to Bitcoin (BTC) and Altcoins market woke up with a slight crash in the first hours of valentine’s day. This can affect the CME Ethereum futures lunch with a cold start in its very beginning.

Analyzing a group of commodities and FX contract launches in the past two decades. Might give us a better point of view on the matter so we will review data from the CME’s historical first exchange dates index to see whether there is a discernible price trend. That occurs after CME Ethereum futures listings.

Crude palm oil

The time crude palm oil futures launched at CME Ethereum futures in May 2010. They did not influence its ongoing price recovery as the over information demonstrates. Comparative contracts had as of now existed for about a decade at NYMEX. Hence the above event might have held lesser significance as both exchanges handle institutional clients.

Numerous variables seem to have caused palm oil prices to climb after the CME Ethereum futures launch. Counting WTI oil’s 23% positive execution over the next five months.

South Korean won

On a similar tone, the South Korean won futures recorded in September 2006. And in this instance the launch did appear to have a prompt effect on price.

Despite not having a futures contract, Non-Deliverable Forwards (NDF) for the South Korean won as of now existed ahead of the CME posting. These NDF contracts are more often than not exchanged over-the-counter (OTC) and are seldomly transferable between investors. This implies that the recorded futures contract had a broader number of institutions that might take part.

Once again, it is impossible to assess whether this futures contract launch had a prompt effect on price. It’s conceivable that the South Korean won devaluation taken after the drift of rising or Asian economies. Subsequently, sticking this development to CME Ethereum futures launch appears a stretch.

How did commodities fare?

Both Ether price and Bitcoin (BTC) are ordinarily considered rare digital commodities, hence it makes sense to compare them against other past CME launches.

Going back to commodities, Diammonium phosphate (DAP). A broadly used fertilizer, held its CME Ethereum futures contracts a big appearance in June 2004.

Earlier to the CME launch, the Chicago Board of Trade (CBOT) held these contracts since 1991. All things considered, there’s potential evidence of a price dump ahead of the posting. However, for those analyzing a broader time outline, the listing itself appeared like a price catalyst instead of something negative.

South African coal futures

Coal futures began trading in July 2001 at CME. And unlike the already talked about examples. It did not have a listed proxy on other exchanges. Comparable to Bitcoin (BTC), a 50% climb happened over the year and a half that preceded its debut.

The result mirrors Bitcoin’s listing, as the product dropped 33% amid the next twelve months. To conclude, there is no set trend that permits analysts to foresee the performance of an asset after a CME Ethereum futures listing. Numerous historical occasions have been lined up, and a concrete design has not been found.

Not all futures contract gathers related liquidity and the CBOE Bitcoin (BTC) futures delisting proves this point. At this point, it’s safe to conclude that Ether’s future price performance will depend on a lot of things like the performance of Eth2 and its crucial role in the DeFi sector.

References
https://cointelegraph.com/news/here-s-how-eth2-defi-and-bitcoin-price-will-impact…
https://www.cmegroup.com/
https://www.coindesk.com/cme-ether…
https://www.cftc.gov/dea/futures/deacmesf.htm

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