Ethereum ETF Set For 2022 Plus CME “Micro Futures” Coming In December
With two Bitcoin futures ETFs already approved by the SEC, some industry experts speculate that an Ethereum futures ETF could be next to hit the US market.
Ethereum Rallies As ETF Rumors Gain Momentum
Ethereum rallied above $4,600 to hit a new all-time high yesterday. The rally is partly attributed to a number of factors: the successful launch of Ethereum’s Altair upgrade last week, raising expectations for an Ethereum futures ETF, and a bullish macro picture for the crypto market as a whole.
In mid-October, Bitcoin price hit a new high after the SEC approved a futures ETF tracking the flagship cryptocurrency. Now, traders are betting on a repeat scenario for ETH, anticipating an ETF to hit the market by the year-end or early 2022 and push the prices to unseen levels. Luuk Strijers, chief commercial officer at Deribit, said:
“Simply put, the market seems bullish with regards to ethereum’s potential by year-end or the first quarter.”
All this has led to considerable optimism around ETH prices. Reportedly, interest in call options contracts that give investors the opportunity to buy ETH at $15,000 in March 2022 is becoming increasingly popular. This suggests that market participants are betting ETH’s price will more than triple following the launch of an ETF.
Adam Farthing, chief risk officer for Japan at crypto specialist trading firm B2C2 added that:
“This flow [in call options contracts] began around the time the bitcoin ETF was confirmed, and is thought to be whales positioning for an Ethereum futures ETF announcement,”.
However, Trey Griggs, CEO for GSR’s US business, believes the SEC might not divert its attention to an Ethereum ETF just yet since it has to deal with a stack of Bitcoin ETF applications first. However, as soon as the regulatory body gets through its BTC applications, it can “very quickly turn their apparatus to an Ethereum futures-based ETF,” he said to Blockworks.
Griggs added that Ethereum has sufficient trading history and the SEC could approve a future-based product tracking it by the year-end. “In terms of the analytics and the research and all of the data that they require in order to approve an ETF, including the regulatory footprint and oversight, all of those boxes have been checked,” he said, hinting that ETH meets all the SEC requirements.
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CME to Launch Micro ETH Futures
Amid rising interest in Ethereum-linked products, the Chicago Mercantile Exchange (CME) Group, has unveiled plans to launch “micro” ETH futures. In a press release, CME Group announced that it aims to expand its crypto derivatives offerings with the debut of micro Ether futures, which is still pending regulatory review.
The micro ETH futures product, projected to arrive on December 6, would organize futures at one-tenth of one Ethereum, offering market participants a cost-effective way “to hedge their spot ether price risk or more nimbly execute ether trading strategies, all while retaining the features and benefits of CME Group’s larger-sized Ether futures.”
CME Group already offers several crypto derivative products, including one for micro Bitcoin futures, which was launched back in May. The micro Bitcoin futures is also sized at one-tenth of one BTC — or 0.1 BTC.
Tim McCourt, head of equity index at CME Group Global, acknowledged that their Ether futures product has seen considerable growth since its debut in February, particularly among institutional traders. He noted that the rising price of ETH brings the need for a micro-sized contract. McCourt said:
“The price of ether has more than doubled since these contracts were introduced, creating demand for a micro-sized contract to make this market even more accessible to a broader range of participants. Micro Ether futures will offer even more choice and precision in how they trade Ether futures in a transparent, regulated and efficient manner at CME Group.”
As the ETH price resumes its upward trend, Ether futures contracts may become inaccessible to a large portion of the market. Therefore, the launch of the micro Ether futures product marks a significant step towards attracting more retail investors.
When do you think an Ethereum futures ETF would hit the market? Let us know in the comments below.