CME Registers $33M Worth Of Ethereum Futures On Launch Day

What Happened: The CME Group Inc (NASDAQ: CME) Exchange has launched futures contracts for the second-largest cryptocurrency by market cap, Ethereum.

The contracts went live under the ticker ETH1, opening at $1669.75, with over 20 contracts traded within the first eight minutes of trading.

By the end of the trading day, it registered 388 contracts, which accounts for 19,400 ETH, or $33 million at press time.

Why It Matters: The contracts are cash-settled and based on the exchange’s reference rate that includes data from major cryptocurrency exchanges Bitstamp, Coinbase, Gemini, itBit, and Kraken.

A single contract has "a value of 50 times the value of the Ether-Dollar Reference Rate Index (ETHUSD_RR) and is quoted in US dollars per one Ether," according to the official site.

"As institutional demand for transparent, exchange-listed crypto derivatives continues to increase, we are pleased to launch our new Ether futures contract," says Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.

What Else: Last year, CME overtook several other crypto-exchanges like Binance and Kraken to become the largest market for Bitcoin Futures. Data from analytics platform skew revealed that CME accounted for 19.09% or $2.1 billion of the $11 billion overall open interest in Bitcoin in futures markets.

This was considered to be driven by institutional demand for the market-leading cryptocurrency, which propelled it to new all-time highs. Many market proponents expect the CME launch of ETH futures to have a similar effect on the crypto asset's price.

The earliest traditional financial institutions that bought BTC are already looking at ETH, if not bought already. And rightfully so. The most used cryptonetwork + future of finance + a potential deflationary monetary policy narrative make it extremely compelling.

— Qiao Wang (@QwQiao) February 7, 2021

"Just like in other capital markets, derivatives have become the avenue of choice for institutions to access cryptocurrencies," says Sui Chung, CEO of CF Benchmarks.
 

ETH was trading at $1,730.58, up 12% over the past 24 hours at the time of publishing.