According to the report, the new contracts, ETHUSD, let traders speculate on the future USD price of ETH. Traders who believe that the price of ETH will increase will purchase the futures contracts, while those with a contrary opinion will sell it.
The leverage offered by the new contract is up to 50 times and require margin to be posted in Bitcoin (BTC). This implies that only BTC can be used by traders to go short or long.
The futures have a fixed Bitcoin (BTC) multiplier of 0.000001 per 1 USD. This means that the contract pays 0.000001 BTC for each 1 USD, without considering the price of the USD of ETH.
This enables traders to go long or short the ETH/USD exchange rate, without touching ETH or USD. Going by the report, the first ETHUSD contract will expire in June 2020.
BitMEX Already Offers ETH Perpetual and Futures Contracts
It’s well known that BitMEX already offers ETH perpetual contracts and futures contracts. ETH perpetual contracts have no settlement, due to being perpetual, while ETH futures contracts allow traders to speculate on the value of the ETH/BTC exchange rate than ETH/USD exchange rate.
The introduction of new contracts started playing out at a time when BitMEX is facing challenges related to liquidation, ever since the price of Bitcoin (BTC) tanked by over 50% within 24 hours in mid-march 2020.