CME Group is an American financial company based on the Chicago Mercantile Exchange, introduction of ETH futures on the Chicago Stock market (CME) reminds us of the introduction of the BTC in 2017 which marked the end of the bull market at $20.000. So what can we expect from this event, let's dive into it.
Since February 8th CME ETH futures trading is open. But what does it change, firstly it further institutionalizes the crypto market, which is seeing more and more institutional capital pouring out on it in recent months. Certainly, future contracts have existed for a long time on cryptocurrencies, but on so-called alternative exchanges, such as Binance. Institutionals only trade with derivatives in historical and regulated exchanges like CME.
Another direct consequence is the volume increase of futures contracts on Ethereum, a lot of institutionals flows will highly contribute to this explosion. Another massive change : the arrival of due dates, this will involve a lot of market volatility in the days prior to closing, knowing these closing dates, which are public, will therefore be an advantage for trading Ethereum.
Moreover CME doesn’t rate weekends. There could be price differences with the spot, between the Friday closing and the opening at the end of the weekend (creating gaps in the chart like BTC). The entry of Ethereum into CME also offers new information, often valuable to traders, the Comminment of traders, published every Friday night, announces the positions held by the institutions, this will now have to be taken into account in the market analysis.
Concerning a possible retracement for ETH after the introduction it didn't happened simply because of Tesla's announcement which is probably the biggest news ever for Bitcoin & cryptocurrencies in general. Indeed back in 2017 when BTC was introduced on CME a sentiment of fear created a drop of price during couple of weeks and then we entered bear market. But times have changed, more & more institutionals are joining & investing, as a result the introduction of ETH on CME appears to be a good news for Ethereum and the crypto market.