CME Group Euro-denominated Bitcoin and Ethereum products go live
CME Group Inc. has launched new euro-denominated Bitcoin and Ethereum futures contracts as derivatives markets continue to show healthy trading volumes.
First announced on August 4, 2022, the new bitcoin futures contract will be set at five bitcoin and the new Ethereum futures contract at 50 ether.
They will be cash settled, meaning that US dollars will be exchanged between buyer and seller on the contract’s expiration date instead of the buyer receiving bitcoin. The cash settlement will be made using the CME CF Bitcoin-Euro Reference Rate and the CME CF Ether-Euro Reference Rate.
Built on a solid foundation
The new futures contracts come during a challenging period for cryptocurrencies, with bitcoin prices currently down 70% from their November 2021 peak and Ethereum hovering around $1,500, down over 66% over the same period.
According to Tim McCourt, Global Head of Equity and FX Products at CME Group, the launch of the new euro-denominated contracts is built on the foundation of solid growth and deep liquidity in dollar-denominated contracts. The new contracts will provide local and international clients with “more precise and regulated tools” to secure exposure to the two largest cryptocurrencies in the world.
Derivative products see greater trading volume
Crypto derivative products experience higher trading volumes than spot products, rising to $3.1 trillion in July 2022 compared to $1.3 trillion for spot trading. Binance and FTX have seen trading volumes of $54 billion and $7 billion in the past 24 hours, according to Coingecko. Coinbase recently launched a bitcoin ‘nano futures’ contract through the acquisition of FairX, a company specializing in derivative products.
Major crypto exchanges have bought smaller companies, hoping to leverage the license they hold with the Commodities and Futures Trading Commission to offer leverage on spot crypto products. Exchanges allow users to borrow capital called leverage to increase their trading position, a popular strategy in retail investing.
CME is the only regulated bitcoin futures marketplace in the US, with a trading volume of around 4% of the global derivatives market in July 2022.
It launched micro bitcoin and ether futures contracts, setting the contract at 1/10 of a BTC last year to attract investors with less capital.
On August 18, 2022, CME Group announced its upcoming ETH options as interest in its standard and micro Ethereum futures contracts increased in anticipation of the upcoming merger.
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