CME Ethereum futures are live – Is ETH now facing the same fate as Bitcoin at the end of 2017?
CME Ethereum futures go live while the Bitcoin price has written a new all-time high, driven by the latest Tesla news.
It’s a neck-and-neck race and events are really rolling over. Only today, it was announced through an official letter that Tesla has invested 1.5 billion US dollars in Bitcoin and also wants to Bitcoin Revolution accept BTC as a means of payment for its products in the future. At the same time, CME Ethereum futures are going live and many are wondering what impact this will have on the market and especially the Ethereum price itself.
The Chicago Mercantile Exchange (CME) has launched its highly anticipated futures contracts for Ether, the native cryptocurrency of the Ethereum network.
Announced back in mid-December, the big event has now finally gone live with Ether futures trading, with the February contract recording an opening price of $1,669.75. At that point, the spot price for ETH was around $1,600.
The Chicago-based exchange has traded 135 contracts so far, with most activity focused on the February expiration date. The futures contracts are legal agreements to buy or sell the crypto asset at a predetermined price at a later date.
Current CME Ethereum Futures
CME’s Ethereum futures are cash settled and based on the exchange’s reference price, which includes data from major cryptocurrency exchanges Bitstamp, Coinbase, Gemini, itBit and Kraken.
The world’s first regulated Ether futures product could attract more institutional demand for the second-largest cryptocurrency by market value and boost the recent Ethereum price rally.
Qiao Wang, cryptocurrency researcher and investor and co-founder of Messari, tweeted yesterday (Sunday):
‚The first traditional financial institutions that bought BTC are already looking at ETH, if they haven’t already bought. And rightly so. The most widely used crypto network + the future of finance + a potential deflationary monetary policy make it extremely compelling.
Wang predicts that the current rally could take Ethereum to $5,000 or higher in the long run.
Could CME futures collapse the Ethereum price like they did the Bitcoin price in 2017?
ETH has tripled in value since CME announced its plans to list futures contracts for Ethereum on 16 December 2020. A similar pattern was already evident in 2017. Back then, the bitcoin price experienced a price surge from $6,000 to $19,783 following the announcement of CME BTC futures. Again, the Bitcoin price had tripled in value. At the same time, the live walk of the CME BTC futures marked the peak in the Bitcoin price before it dipped into a 2-year bear market.
This parallel leads many to fear that the Ethereum price will now face a similar fate.
However, this fear is not necessarily justified. As trader and analyst Alex Kruger noted on Twitter, the market is now different. It is more mature, the fundamentals are completely different and there are now more and more institutional investors involved in the market alongside retail investors. He sees a continuation of the Ethereum rally.