Opinion CME begins offering Ethereum Futures

CME begins offering Ethereum Futures

February 13, 2021

However, similar to most novel ventures like esports and social media, this is a much harder task. Instead of setting up a clear upwards trendline because of the CME futures listing, the same crypto network could see an increased period of already high volatility in the weeks and months to come. Because of that, analysis and market experts are working on offering a branching tree of possibilities that will slowly unravel itself in the near future.

The famous Chicago exchange officially began offering ethereum futures contracts. This service went live on the previous Sunday. Since then, it has seen 77 ETH contracts created and there are plenty of signs that more will be rolling in soon. This is great news for the ethereum cryptocurrency community and everyone trading and investing in it. It also shows a rising diversification not just inside of the wider crypto ecosystem, but also when it comes to other financial entities that are connected to it. Also, in the more immediate future, many are trying to chart a course of the ETH token price and market capitalization.

Chicago Mercantile Exchange Futures Listing

The Chicago Mercantile Exchange or CME is a world-class financial institution that has a strong tie to the cryptocurrency domain and even the history of crypto as a whole. Four years ago, in 2017, it made history by listing bitcoin futures options on its exchange. This until then-unprecedented level of cryptocurrency recognition in the mainstream domain made it an instantly venerable name in the crypto community. However, besides the respect of the traders and developers, the CME listing also cemented the bitcoin currency bull run of 2017 almost immediately after its decision to list these futures options. 

These futures contracts represent legal agreements that include buying or selling of crypto assets at a predetermined level of price or at some future date. Now, the same institution is doing the same for ethereum. Its futures contracts began working for ethereum on February 8. Previously, it made the same announcement in mid-December 2020. Very soon after that service when live, the Chicago-based exchange began registering traders. In around one day of the service being live, it traded 77 contracts. These are mostly focusing on the February expiry. But, while these come with a level of financial activity, they are also a major driver for the change of the overall price of a particular cryptocurrency, or ETH in this case. 

Information Pool

Besides the fact that the CME ethereum futures bring a large level of institutional recognition, they also add drastically to the informational ecosystem of ETH. Presently, one of the key issues that the crypto community has is its relatively poor informational landscape. Even MicroStrategy, which recently invested over a billion USD in buying cryptocurrency tokens from the bitcoin network, believes this to be the case. Because of that, the same company is working on developing its own app system of network intelligence that will assess BTC networks alone. 

However, the futures listing will provide a boost to the ETH network as well. This is because CME will present an exchange rate that pools in data from different sources. These include major cryptocurrency digital exchanges like Coinbase, but also Bitstamp, Kraken, and Gemini. The same influx of relatively better assessed and presented metadata on the state of the ethereum network is also a major step forward in the overall development of this particular digital currency blockchain system.

Institutional Attention

As weeks turn into months in the present year, it is more and more clear that the current bitcoin bull run is generated by waste institutional backing. Besides MicroStrategy, companies like the mega-superstar of the business world, Tesla Motors, also bought a huge amount of BTC token. Other companies likely did the same but with a lot less media attention. Now, the listing of ETH futures is also drawing that essential institutional attention to the second-biggest cryptocurrency by market capitalization and price of a token. That already resulted in several breaking of price records, but also many analysts believe that it is also only the start of its appeal to companies as a form of a hedge. 

Now, many businesses, whether they like it or not, are looking towards ETH and consider the possibility of getting some money on its future growth. Because of this, many industry insiders believe that companies already took the opportunity to stock up on ETH tokens. The difference here is that most are either deciding to go public with it or that they are investing the level of Tesla or MicroStrategy. But, even investments on this smaller scale are clearly making a big and very felt difference in the token price. 

Future of Decentralized Finance

The focus of the news media is presently all about CME and its listing of ETH futures. However, the real potential in the sense of financial pathways and the technology that supports it is in the ethereum network. More and more experts and blockchain developers are certain that the future of finance lies in the ETH token and the systems built on top of it. That is in turn the entire decentralized finance revolution that is also taking place in the background. Yet, the amount of fiat currency that is being locked in the same systems shows that the DeFi movement is not a joke.

Unlike the initial coin offering craze of 2017, DeFi appears a lot more stable and offers tangible benefits to its users. Of course, there are plenty of obstacles on the journey and many are already visible. Ethereum network is having trouble scaling its operations and resolving the slowdown of transactions. Also, there is the nagging issue of fees that come with the transactions. But, despite them, there is a big promise in the future of the Ethereum network that is strongly tied to the future of decentralized finance. While CME listing is definitely helping ETH token price outlook, it is only one piece of a larger puzzle. Presently, that puzzle seems able to take the price of a single ETH token to a value of 5,000 USD or more in the long-run.