CME Group, one of the world’s largest derivatives exchanges, has announced that it will introduce Ethereum to Bitcoin ratio futures. The new product will be listed on the exchange starting on February 8th, 2021, pending regulatory approval.
The ETH/BTC futures will provide investors with a new way to hedge risks and speculate on the relationship between the two cryptocurrencies. The futures contract will be cash-settled, meaning that investors will not need to hold the underlying cryptocurrencies to trade the product.
According to Tim McCourt, CME Group’s Global Head of Equity Index and Alternative Investment Products, the introduction of ETH/BTC futures will provide clients with “another tool to hedge their spot or derivatives positions, express a view on the ratio of these two cryptocurrencies, and trade the spread between the two.”
CME Group has been a pioneer in the cryptocurrency derivatives market, having launched Bitcoin futures in December 2017. Since then, the exchange has seen significant growth in its Bitcoin futures trading volumes, with institutional investors and traders increasingly entering the market.
The new ETH/BTC futures product is expected to attract similar interest, particularly as Ethereum’s market capitalization has grown to become the second-largest in the cryptocurrency market, behind only Bitcoin.
Introduction
CME Group’s announcement that it will introduce Ethereum to Bitcoin ratio futures marks an important development in the cryptocurrency derivatives market. The new product will provide investors with a new way to hedge risks and speculate on the relationship between the two largest cryptocurrencies by market capitalization.
Benefits of ETH/BTC Ratio Futures
The ETH/BTC ratio futures contract will be cash-settled, meaning that investors will not need to hold the underlying cryptocurrencies to trade the product. This will provide investors with a more accessible way to gain exposure to the relationship between the two cryptocurrencies.
Moreover, the futures contract will allow investors to hedge their spot or derivatives positions, express a view on the ratio of these two cryptocurrencies, and trade the spread between the two. This will provide investors with more flexibility in managing their cryptocurrency portfolios.
Potential Impact on the Cryptocurrency Market
The introduction of ETH/BTC ratio futures could have a significant impact on the cryptocurrency market. As institutional investors and traders increasingly enter the market, the futures contract is likely to attract significant interest.
Moreover, as Ethereum’s market capitalization has grown to become the second-largest in the cryptocurrency market, behind only Bitcoin, the ETH/BTC ratio futures contract could provide investors with a new way to diversify their cryptocurrency portfolios.
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Conclusion
CME Group’s introduction of Ethereum to Bitcoin ratio futures is an important development in the cryptocurrency derivatives market. The new product will provide investors with a new way to hedge risks and speculate on the relationship between the two largest cryptocurrencies by market capitalization. As the cryptocurrency market continues to evolve, the futures contract is likely to attract significant interest from institutional investors and traders seeking to diversify their cryptocurrency portfolios.
