Every single monthly contract possesses 50 ethers (ETH), the group reported. The settlement occurs in cash following the CME ether-dollar index.
The Chicago Mercantile Exchange (CME), one of the most relevant derivatives exchanges globally, began this Monday, February 8, commercializing future contracts of ethers (ETH), the native cryptocurrency of the Ethereum network. It is a new product that seeks to replicate the one already offered with bitcoin (BTC) since 2017.
Each monthly contract possesses 50 ETH, which, according to the cryptocurrency’s current price ($ 1,705), would surpass the $ 85,000. Accredited traders can operate tradings with a minimum of five contracts, as reported by the CME group through its website.
“The addition of ether, along with our liquid Bitcoin futures and options, will create new paths and opportunities for a wide range of clients,” said Tim McCourt, CME Group Global Head of Equity Indices and Alternative Investment Products. The executive clarified that institutional demand for these types of products continues to increase.
The group indicated that among its liquidity providers for its new product will be: Akuna Capital, BlockFi, Cumberland, Galaxy Digital Trading, Flow Traders B.V, Genesis Global Capital, CoinShares, LedgerPrime, and NYDIG. Some of these also work for bitcoin futures and options.
CME highlighted that the settlement of ethers futures contracts would happen in cash, following its ether-dollar index. It is also relevant to say that the operators who participate in the negotiations do not directly control the cryptocurrencies in these cases. Traders acquire representative contracts for an estimated value according to the market price.
Future Contracts to Get closer to Cryptocurrencies
The commercialization of the futures contracts of ethers received its announcement in December 2020 by CME. This kind of product allows the involved parties, buyers, and sellers to establish an asset’s representation with a specific quantity and price on a date in the future.
With roots in the Ethereum network’s cryptocurrency, the new contracts arrive amid an uptrend in the market. Ether reached a great price of $ 1,752 per unit on February 5, according to CoinGecko records.
In December 2017, CME Group attracted media attention after its confirmation regarding its bitcoin futures contracts. It was a milestone for institutional investments and cryptocurrencies since it was the first financial product on BTC that comes from an institution with such a past and reputation.
This operation has resulted in positive numbers for CME. In May of last year, open interest in bitcoin futures reached an all-time high of $ 400 million at the time.
With the commercialization of ether futures, it is clear that the institutional demand for products related to cryptocurrencies continues ascending. Many funds and companies such as Tesla, MicroStrategy, and Square have already invested multi-millionaire amounts in BTC.
By: Jenson Nuñez
