CBOE: Ethereum futures coming soon but it is a challenge

The Chicago Board Options Exchange (CBOE) launched Bitcoin futures in December 2017, and waiting for Commodity Futures Trading Commission (CFTC) to permit Ethereum futures in the end of 2018.

Bitcoin and Ethereum are a more liquid and encrypted cryptocurrency. On June, the US Securities and Exchange Commission (SEC) officially announced that Ethereum is not categorize to securities, which seems to pave the pathway for the Ethereum futures. CBOE has been considering this issue since the first bitcoin futures launched. They have discussed this in detail with the Commodity Futures Trading Commission. At the time, CBOE President Chris welcomed the SEC’s decision. He said that since the end of 2017, it has been a hot topic since to launch Ethereum futures contracts and they are very pleased that the SEC has cleared a critical obstacle for it.

The market indeed has a dense demand for Ethereum futures. After Bitcoin futures successfully launched, CBOE plans to adopt the same designation and structure to apply on any other forthcoming cryptocurrency futures such as Litecoin. Thus what happens if launching Ethereum futures? Although the details of CBOE Ethereum futures have yet to be revealed, the price has already been impacted (since then, Ethereum market appears a rapid growth in all exchanges).

Ethereum price rebounded from a small decline on August 31, which can be attributed to these initial reports. The price of Bitcoin also showed a similar pattern of volatility, with a strong rise on the same day.

It is not easy to predict the trend of any market, especially for cryptocurrency. However, big moves like major financial institutions seem able to affect the marketplace. The co-founder of Fundstrat, Thomas Lee has said that Ethereum futures will have a negative impact on the price of cryptocurrencies.

While, a well-known senior market analyst Mati Greenspan recently believes that the market of Ethereum futures is going to be optimistic as when Wall Street attempts to bridge with the cryptocurrency market, and he said that to launch Ethereum futures was the next significant step.

Although some people believed on social media that excessive short selling would damage the value of Ethereum (since Ethereum value is typically interactive with Bitcoin), Greenspan debates that short-selling is a key component of cryptocurrency price and helps the market development. In addition, he believes that the Ethereum futures will brings investors’ attention to cryptocurrency market, which is likely to attract new investors with great financial wealth, thus creating a chain effect on the entire marketplace.

Greenspan is very optimistic about Ethereum futures trading, whereas some people have put forward cautions on this. For example, in the past year, the Bitcoin futures market clearly has two modes - manipulation and large market operation. Some investors have made considerable interests, while some have lost. This phenomenon is very similar to the foreign currency exchange market 30 years ago. Both long and short positions that could easily influence the direction of the market.

The fear of Ethereum futures is reasonable. The market capitalization of Ethereum is much smaller than Bitcoin (Bitcoin market is nearly 500% larger than Ethereum). Ethereum futures may fall below $150 or even $100. Meanwhile, 95% of ICOs are raised with ERC-20 tokens. What if an ICO raises 20 million US dollars and have Ethereum on hold? Possibly the funds becomes halved, eventually result a sudden collapse of other tokens and issuers based on Ethereum network, latterly a chain of devastating effects.

Although Bitcoin has firstly disclosed the gate to the market of cryptocurrency futures. However, that is difficult to learn the lesson and to conduct a conclusion in less than a year. Soon after the Chicago Board of Trade Exchange (CBOE) and the Chicago Mercantile Exchange (CME) respectively launched futures products, Bitcoin reached the highest peak over than $20,000 (check as you can see the highest peak of Bitcoin pricewithin period Dec 2017 to Jan 2018).

According to the published data, the average daily trading volume of Bitcoin futures has increased by 93% in the first quarter of 2018, and continuously been growing in the middle of 2018. Undoubtedly the demand of cryptocurrency futures is raising. In the next a few months, the launch of Ethereum futures will be noticed around world. But again, predicting the price of a cryptocurrency is blindness.

All data for market analysis are collected from Citicoins.com