Ethereum,  Markets Report

Markets Report: Ethereum hits 2.5-year high, breaking $600 as CME announces 2021 futures launch

The largest altcoin hits $620 on the back of its own futures commitment on the day that Bitcoin reaches $20,800

As Bitcoin hits all-time highs and claims $20,000 this week, news of a different kind saw bulls double down on largest altcoin Ethereum.

In a press release on December 16, CME Group, one of the first companies to launch Bitcoin futures trading in 2017, confirmed that ether futures would launch in February next year.

The news coincided with BTC/USD hitting new record highs of $20,800, and at press time, ether’s daily gains were not far behind. 

At $620, ETH/USD was trading at its highest since June 2018, when the pair was still trending down from the height of its last bull market. 

Markets Report: Ethereum Price
ETH/USD saw its fortunes reverse this week. Source: TradingView

CME: Ether futures are “valuable tool”

“Based on increasing client demand and robust growth in our Bitcoin futures and options markets, we believe the addition of ether futures will provide our clients with a valuable tool to trade and hedge this growing cryptocurrency,” Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products, commented in the press release. 

“Ethereum is the second-largest cryptocurrency by both market capitalization and daily volume. The introduction of listed ether futures to our time-tested, regulated CME Group derivatives marketplace will help to create a forward curve so Ethereum market participants can better manage price risk.”

Coming hot on the heels of the release of Ethereum 2.0, CME’s decision underscored continued faith in non-bitcoin cryptocurrency assets and their appeal to mainstream audiences.

Ethereum proponents had long touted the token’s enduring potential, despite controversy surrounding everything from the promise of Ethereum 2.0 to the transparency of the ETH supply.

Vitalik Buterin, co-founder of the Ethereum network, had yet to comment on the move at press time. 

Institutional crypto interest shows no signs of slowdown

CME meanwhile chose its timing carefully, with the announcement coming exactly three years after the eve of its Bitcoin futures launch. After a slow uptake period last several years, institutional Bitcoin activity exploded in 2020, with futures data telling of consistent all-time highs in both volume and open interest. 

“In 2020-to-date, 8,560 CME Bitcoin futures contracts (equivalent to about 42,800 bitcoin) have traded on average each day. At the same time, institutional interest continues to build with the number of large open interest holders reaching a record of 110 in December,” the company added in the release.

As Modern Consensus reported, interest from large corporations served to fuel what some commentators argue is a “crisis” in Bitcoin liquidity, a process which continued to play out this week with the announcement of more buy-ins. 

Replicate moves involving ether, however, remained absent beyond facilities such as the Grayscale Ethereum Trust. The Trust contained $1.72 billion in assets under management as of December 13.

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.