Investors bullish on Ethereum – what does the much-hyped CME futures launch bring?
Today is finally the day – CME Group will launch a futures market for Ethereum.
CME Group is one of the world’s leading financial exchanges and hosts much of the trading in top commodities, including Bitcoin. CME Group made headlines in the crypto space in 2017 when it launched futures for BTC.
As this launch happened to mark the peak of the 2017 bull market, some have speculated that it will have the same effect this time around. A number of traders have postulated that this launch may cause a Bitcoin Machine short-term top.
However, a vast majority of analysts seem bullish on Ethereum (New all-time high for Ethereum!) as the launch of this regulated investment vehicle looms. This market should allow institutional players to get better exposure to Ethereum.
Analysts on the launch of Ethereum CME futures.
Analysts appear to be largely bullish or at least neutral on the upcoming launch of CME Ethereum futures contracts.
Ryan Watkins, Researcher/Analyst at Messari, comments that the „fear“ of how the upcoming launch could affect the crypto market is „ridiculous“.
Watkins points out that the fears of a correction after this launch stem from just „one data point“. That is, just because the previous CME crypto futures launch coincided with a previous top doesn’t mean it will happen a second time.
Furthermore, Watkins believes there are clear differences in market conditions in December 2017 and market conditions now.
He did not name these changes in his thread, but to highlight just two:
Futures are not extremely overvalued as they were in earlier bull trends or earlier parts of the current uptrend.
And second, there is a clear institutional bid, as evident by public announcements from Wall Street funds, on-chain data and interviews published by top media outlets.
Fear of the upcoming ETH CME futures launch is ridiculous.
Not only does that fear stem from just one data point, but there’s also clear differences between market conditions in December 2017 and market conditions now.
Also don’t think institutions are itching to short ETH….
– Ryan Watkins (@RyanWatkins_) February 7, 2021
Economist Alex Kruger discussed more specifically how this launch could drive Ethereum markets.
„This is a big point. CME futures will allow parties that currently struggle to access the $ETH markets to hedge grayscale $ETHE risk, leading to increased institutional demand for $ETHE, which in turn increases spot demand and compresses the $ETHE premium.“
Existing investors who have access to ETHE and Grayscale’s products may not want to buy the product, even at net asset value.
The introduction of futures, which should be traded at/very close to the spot price and have lower fees than fund products, might be a better option for certain players,