By Michael Scott
The global leading derivatives exchange is expanding its digital assets offering by adding Ethereum/Bitcoin (ETH/BTC) futures.
The Chicago Mercantile Exchange (CME) Group statement on Thursday, June 29, reaffirmed plans to introduce the ETH/BTC ratio futures by July 31. The statement echoes previous pronouncements that the company will expand its product offering through ETH/BTC ratio futures.
CME Group Leveraging Value Trading opportunities in Ethereum and Bitcoin
CME Group indicates that the product will utilize the ticker symbol EBR being the Ethereum futures price relative to the Bitcoin futures price. The ratio calculation will use Ethereum’s final settlement price expressed to the BTC, retaining a positive trend across the contract months.
The global executive of crypto products at CME Group, Giovanni Vicioso, revealed in a statement that Ethereum and Bitcoin portray a historically high correlation. While the two crypto assets have realized growth over time, market dynamics affect their performance differently. It results in value trading opportunities for the ratio.
Vicioso added that the ETH/BTC ratio futures would efficiently capture the value of both constituents in a single trade. The CME Group submission identifies the ratio futures contract as a unique financial derivative allowing the investors to speculate or hedge against the performance inherent in the underlying constituent assets.
CME Group indicates that the contract allows setting a predetermined ratio for the two underlying assets. It will enable the traders to take positions relative to the expectations of ration movement in the future.
CME Targets to Attract Investors Seeking Single Trade Exposure in ETH and BTC
The contract sets a predetermined ratio between the two assets and allows traders to take positions based on their expectations of future ration movement. The filing pending approval indicates that the underlying assets, including indices, commodities, and stocks, could be unrelated or related.
Vicioso observes that approving ETH/BTC ratio futures will allow investors to realize value opportunities in the two leading crypto assets by executing a single trade. It will eliminate the need to assume a directional view.
The new contract creates broader opportunities for clients seeking hedge positions. Vicioso observes that the ETH/BTC ratio will benefit clients as an efficient alternative yet cost-effective trading opportunity.
CME Group Expansion of Product Offering Yields Regulated Platform Attracting Institutional Investors
The decision by CME to expand product offering through ETH/BTC ratio futures affirms the exchange’s foray into the crypto ecosystem. The inclusion of crypto products began in December 2017 when it offered an initial Bitcoin futures contract. It realized a strong bull run taking the price from $1000 to $20000 by the end of the year.
CME Group’s foray into the cryptocurrency market paved a channel for institutional investors to embrace the regulated platform where they could trade the Bitcoin futures. Its accomplishment allowed increased mainstream adoption, delivering expanded liquidity to the market.
Launching the Bitcoin futures by CME Group coincided with the consequent market slump. Tim McCourt, who serves as the head executive for Equity and FX products division at CME Group, downplayed such sentiments as mere speculations.
CME Group would assert its presence by adding Ethereum futures in February 2021. The unveiling of the futures expanded the portfolio for institutional investors seeking exposure to the second-ranked crypto by market capitalization.
Market Outlook of CME Group Transactions
A review of the CME Group exchange shows that 92610 bitcoin were transacted, translating to $2.82 billion in current prices. The exchange ranked second from Binance, involved in bitcoin futures yielding $4.19 billion in the past 24 hours as outlined in the CoinGlass.
Further analysis of the CME exchange reveals 608730 Ethereum futures yielding $1.170 billion in the past 24 hours.
CME Group has, in recent years, expanded its product offerings by including alternative investment opportunities in digital assets. McCourt confirmed the availability of Micro ETH and Micro BTC futures contracts.
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