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CME Group Launches Ethereum Futures

On February 8th, 2021 the CME group launched Ethereum Futures, a derivative product for the second largest crypto currency next to Bitcoin. Legacy market participants can now have access to Ethereum without having to deal with the security and custody issues that come along with owning digital assets. The launch of this contract is a nice compliment to CME Bitcoin Futures that launched in January of 2018. Institutional investors who have previously had difficulties entering the crypto markets may now do so with the same ease as traditional futures markets. 

 

How will ETH Futures Impact Price?

Many crypto investors were a little nervous heading into the contract launch. This was mostly due to the fact that Bitcoin topped out on the exact day of its futures launch and then went into a multi year bear market. Much like early 2018, Ethereum is currently in a parabolic run up and is already 15x off of it’s March 2020 lows. Many people thought that this futures launch would put the top in crypto again but after a week of trading price has remained stable. The contract opened up at $1777.75 and is sitting at $1835 today. It has been trading within a range from $1674.50 to a high of $1879.75. Volume has been about 400 contracts per day with most of the interest on the February 2021 up front contract. So far the contract seems to have not impacted the price in any significant way but that will likely change as volume increases. 

 

Ethereum Futures Hourly Chart

 

Contract Specs

Each contract is worth 50 ETH and is cash settled so no Ethereum will change hands upon expiry. At the current ETH price of $1835, each contract is worth $91,750 making it unavailable for smaller portfolios to trade. Because of the value of the contract the margin required to trade is also quite high. Minimum price fluctuation is .25 index points or $12.50 per contract meaning the contract changes $50 in value for every dollar in price. Trading hours are the same as Bitcoin Futures trading Sunday thru Friday 5:00pm - 4:pm Central time with a 60 minute break each day starting at 4:00pm. A full description of contract specifications can be found on the CME Group’s website.