On June 29, the Chicago Mercantile Exchange, also known as CME Group, proclaimed its plans to introduce Ether (ETH)/Bitcoin (BTC) Ratio futures, which are set to launch on July 31, subject to regulatory review.
The futures’ settlement will be in cash, following the final settlement price of CME Group’s ETH futures divided by the settlement price of their BTC futures. This strategy coincides with the listing cycle similar to the one observed in CME Group’s other crypto futures contracts.
While ETH and BTC have typically demonstrated high correlation in the past, market dynamics may now differ, showcasing the potential for relative value trading possibilities between the two cryptocurrencies. As the global head of cryptocurrency products at CME Group, Giovanni Vicioso emphasized, the introduction of Ether/Bitcoin Ratio futures will allow investors to capture both digital assets’ exposure in a single trade, without taking a directional view.
The creation of Ether/Bitcoin Ratio futures seems to be an innovative attempt to elevate cryptocurrency investment options. Since the introduction of Bitcoin futures in December 2017 and Ether futures in February 2021, CME Group is steadily widening its crypto offerings, including the recent inclusion of micro BTC and ETH futures contracts in 2022.
However, this continuous progression brings along certain complexities. The need for a regulatory review preceding each launch speaks to the scrutiny needed in the volatile digital assets sector—an arena that’s constantly under the microscope of regulatory measures. While CME Group is expanding investments for traders, it is also potentially exposing them to unpredictable price risks inherent in these new, untested contracts.
On the other hand, CME Group’s endeavours to diversify investment opportunities in the crypto segment go hand-in-hand with the rapidly evolving digital age. Its decision to introduce more precise investment contracts and daily expiries aims to provide market participants increased flexibility in managing short-term price risks, particularly during periods of heightened volatility.
In conclusion, while there is an air of proposition in the move to mix the efficiency and cost-effectiveness of capturing Ether and Bitcoin’s exposure in a single trade, there are also concerns about the risks linked with these novel futures contracts. Nonetheless, these ongoing efforts underscore our progression towards a future more in tune with the digital realm, where blockchain technology and cryptocurrency investments become an everyday norm.
Source: Cointelegraph
