The Chicago Mercantile Exchange (CME) Group on June 29, 2023, announced that it will be rolling out Ether/Bitcoin Ratio futures. The futures contracts are slated to be launched on July 31, subject to regulatory review.
In its announcement, CME Group stated that the futures contracts will be settled in cash. The amount will be derived by dividing the final settlement price of Ether futures by that of Bitcoin futures. These contracts will follow the same listing cycle as the one found in CME Group’s Ether and Bitcoin futures contracts.
Capitalizing on market correlations
Unlike many new cryptocurrencies, Bitcoin and Ether are highly correlated. As the intensity of the correlation changes, market movements may impact one token more than another and thereby creating multiple trading opportunities.
CME Group’s global head of cryptocurrency products Giovanni Vicioso stressed the potential of relative value trading between Bitcoin and Ether. He also highlighted that while the two tokens may have displayed a high correlation historically, their current market dynamics may be different. According to him, the varying market dynamics make it possible for traders to capitalize on the two tokens’ performance differences.
He also said that with the launch of Bitcoin/Ether ratio futures, crypto users will be able to cash in opportunities provided by Bitcoin and Ether in a single trade without requiring any directional view. According to Vicioso, the new futures contract will enable a wide array of crypto users to execute their trading strategies more efficiently and cost-effectively.
According to the CME Group’s website, one of the key benefits of Ether/Bitcoin Ratio futures is that it eliminates price slippage. Crypto users can execute Bitcoin and Ether futures contracts with more ease with ratio futures.
Another benefit that these futures contracts can yield is that traders get to enjoy price discovery in a transparent market. In a transparent environment, all participants can see the same quotes and prices. So, no more relying on a coin tracker for real-time updates.
CME Group’s first stint with the crypto market started in 2017
The first time that the CME Group forayed into the crypto market was in December 2017 when it launched its first Bitcoin futures contract. It later also launched an Ether Futures contract in February 2021.
Sensing the rising demand for crypto investment opportunities, CME Group expanded its offerings by rolling out two new products in 2022 – micro ETH and BTC futures contracts. These micro futures contracts provide traders with more opportunities to trade with the two popular cryptocurrencies. These options are ideal for crypto users who have set specific goals like how to make $100 a day with cryptocurrency.
The CME Group announced its plans to expand its basket of crypto offerings by introducing new options for both micro and standard Bitcoin and Ether contracts on April 17. Back then, the company had claimed that these contracts would be available from May 22, subject to regulatory approvals.
A key factor about these contracts is that traders will have to be careful about what is the best time of day to buy cryptocurrency as these contracts have daily expires from Monday to Friday. The daily expiry helps traders to manage short-term price risks better. With the move, traders will be able to manage short-term price risks with more flexibility and precision even when the market is volatile.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
