In recent days, announcements of new financial products using Bitcoin (BTC) have been multiplying. Following applications for a Bitcoin Spot ETF by BlackRock, Fidelity and Ark Invest, to name but a few, CME Group has declared the launch of a futures contract, composed of BTC and ETH, for the end of July. Why is the company launching this product?
A futures contract with BTC and ETH coming soon?
CME Group, the world’s largest derivatives marketplace, intends to launch a futures contract composed of Bitcoin (BTC) and Ether (ETH). Before the Chicago-based company can officially launch its new service on July 31, it must obtain approval from US regulators.
There are several reasons for launching such a product. Firstly, the company cites the trading opportunities associated with the difference in performance between the two assets according to market cycles.
Although they are highly correlatedthe world’s two largest cryptocurrencies are not performing equally well. For example, while Bitcoin’s price has risen by 84% since January 1, 2023, Ether has grown by 58%, from $1,200 to $1,900.
At the same time, this new product enhances the range of financial services offered by the company. With the Bitcoin spot ETF race launched by BlackRockevery company is looking to innovate in order to be the first to roll out complex financial products to their customers.
According to Giovanni Vicioso, global head of cryptocurrency-related products for the CME Group, this new futures contract offers new investment opportunities for institutional and professional investors:
» With the addition of Ether/Bitcoin futures, investors will be able to gain exposure to Ether (ETH) and Bitcoin (BTC) in a single transaction, without the need to take a directional view. This new contract will help create opportunities for a wide range of clients seeking to gain exposure to positions or execute other trading strategies, all in an efficient and cost-effective manner. «
To determine the price of this new financial productCME Group will take the value of its Ether futures contract and divide it by the value of its dedicated Bitcoin futures contract.
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CME Group: a crypto-friendly company for years
While many companies have been waiting for the 2021 bull market to develop their cryptocurrency-related solutions, CME Group stands out from the crowd by being a forerunner in the field of financial products associated with digital assets.
In December 2017, while the king of cryptocurrencies brushed the $20,000 mark for the first time ever, the American company announced the launch of a groundbreaking product: a Bitcoin futures contract.
While the BTC price collapsed a few weeks later, losing two-thirds of its valuation, the financial products company continued to explore the cryptocurrency scene. In February 2021, when the market entered a new phase of euphoria, CME Group rolled out a new futures contract, this time on Ether.
Over the month of June 2023, futures volumes on the king of cryptocurrencies amounted to $832 billion. Record monthly volumes for this type of financial product is $2,690 billion. The latter was achieved in May 2021, during the previous bullrun.
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Source: PR
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A lifelong enthusiast for new technologies, I gradually became involved in Web3-related activities in the year 2021. As time went by, I wanted to do my bit. That’s when I became a writer, with a view to explaining cryptocurrency-related topics to as many people as possible.
Timothy Bourbotte
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