With growing institutional demand for cryptocurrencies, particularly Bitcoin and Ethereum, CME Group is looking to expand its range of services.
On June 29, CME Group, the world’s leading financial derivatives exchange operator, announced that it would launch ETH/BTC futures ratio, pending regulatory approval. It is expected that the new offering will start trading on July 31.
Like the gold/silver futures ratio, the ETH/BTC futures ratio allows investors to diversify their investments and leverage their positions. The corresponding CME Group Bitcoin futures final settlement price will determine the cash settlement value for the Ether/Bitcoin Ratio futures, CME Group explained.
Furthermore, the statement mentioned that the Ether/Bitcoin ratio would have similar expiration dates and be available for trading during the same periods as the Bitcoin futures and Ether futures contracts offered by CME Group.
New Ways to Invest and Trade
Giovanni Vicioso, CME Group’s Global Head of Cryptocurrency Products, highlighted the advantages of Ether/Bitcoin Ratio futures, including the ability to capture exposure to both cryptocurrencies in a single trade, the flexibility to execute trading strategies without a specific directional view, and the efficiency and cost-effectiveness of utilizing these contracts for various investment objectives.
To wit,
“With the addition of Ether/Bitcoin Ratio futures, investors will be able to capture ether and bitcoin exposure in a single trade, without needing to take a directional view. This new contract will help create opportunities for a broad array of clients looking to hedge positions or execute other trading strategies, all in an efficient, cost-effective manner.”
CME Group’s entry into the cryptocurrency space was marked by the launch of a Bitcoin futures contract in December 2017. The company actively capitalized on the growing interest in digital assets by introducing an Ethereum futures contract in 2021. Responding to market needs, CME further expanded its offerings in 2022 by introducing micro BTC and ETH futures contracts.
On April 17, CME Group announced plans to add more cryptocurrency options to its range of services by introducing standard and micro-sized Bitcoin and Ether contracts. These contracts were scheduled to become available from May 22, subject to regulatory review.
More Interest in Crypto Coming?
The expansion included daily expiries from Monday to Friday, enabling traders to better manage short-term price risks. This strategic move aimed to provide market participants with enhanced precision and flexibility in navigating the short-term price risks of Bitcoin and Ether, particularly in the face of increased volatility in the digital asset sector.
CME’s development comes at a time when financial institutions are actively pursuing Bitcoin ETFs. This week, Fidelity, a prominent asset management firm, officially applied to launch a spot Bitcoin ETF called Wise Origin Bitcoin Trust. Fidelity’s application includes a bilateral SSA custodian agreement with a Bitcoin spot trading platform in the U.S., aiming to prevent market manipulation.
The recent Bitcoin ETF filings are considered one of the most significant breakthroughs, given the SEC’s previous rejections of similar filings.
The proposed service is comparable to BlackRock’s Spot ETF SHARES BITCOIN TRUST. BlackRock’s submission, on the other hand, differs substantially from Fidelity’s SSA provision, as it involves custody sharing with Coinbase, a major cryptocurrency exchange.
Fidelity’s interest in cryptocurrencies is not new. The company previously applied for a Bitcoin Spot ETF in 2021, but the application was rejected by the SEC early the following year.
Recent rumors indicated Fidelity’s readiness to re-enter the Bitcoin Spot ETF race, following the footsteps of other prominent Wall Street players such as BlackRock, WisdomTree, Invesco, and Valkyrie.
Bitcoin Spot ETFs have generated considerable excitement in the cryptocurrency market in the past few weeks. The offerings, if approved, will drive more adoption to the crypto market.
Of course, there are other ways for people to buy cryptos. But larger investors may want products from legacy financial groups.
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