Ether/Bitcoin Ratio Futures Set For Launch By CME Group To Capitalize On Market Dynamics

Derivatives marketplace CME Group on Monday announced its intention to launch Ether ETH/USD/Bitcoin BTC/USD ratio futures on July 31, subject to regulatory approval.

The new futures contract is designed to capitalize on the relative value trading opportunities that have emerged as the market dynamics of Ether and Bitcoin have evolved, the company stated.

"Historically, Ether and Bitcoin have been highly correlated; however, as the two assets have grown over time, market dynamics may affect the performance of one more than the other, creating relative value trading opportunities," said Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products.

The Ether/Bitcoin Ratio futures will allow investors to capture Ether and Bitcoin exposure in a single trade, without needing to take a directional view.

"With the addition of Ether/Bitcoin Ratio futures, investors will be able to capture Ether and Bitcoin exposure in a single trade, without needing to take a directional view. This new contract will help create opportunities for a broad array of clients looking to hedge positions or execute other trading strategies, all in an efficient, cost-effective manner," Vicioso added.

The new futures contract will be cash-settled to the value of the CME Group Ether futures final settlement price, divided by the corresponding CME Group Bitcoin futures final settlement price.

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It will follow the same listing cycle as CME Group Bitcoin futures and Ether futures contracts.

Jason Urban, Global Head of Trading at Galaxy said, "The launch of CME Group Ether/Bitcoin Ratio futures further expands the marketplace for institutions and sophisticated investors who want digital asset exposure in a regulated environment."

Paul Eisma, Head of Options Trading at XBTO, also welcomed the launch, stating that it completes the currency triangle allowing market makers like XBTO to arbitrage synthetically all three futures legs: the BTC/USD and ETH/USD dollar legs, and the ETH/BTC cross.

Brooks Dudley of Marex Capital Markets, Inc., noted that the new ETH/BTC cross-cryptocurrency contract from CME Group should allow investors more flexibility when hedging positions in non-dollar offshore markets.

He called it "another important advancement for CFTC-regulated cryptocurrency derivatives."

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