Make Kitco Your Homepage

CME Group to launch Ether/Bitcoin Ratio futures on July 31

Kitco News

Editor note Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!

(Kitco News) - As the hype around the possibility of a spot Bitcoin (BTC) exchange-traded fund begins to fade, CME Group, the world’s leading derivatives marketplace, is looking to expand the types of digital asset products available to investors with the launch of Ether/Bitcoin Ratio futures.

According to a press release shared with Kitco Crypto, CME Group plans to launch its new Ether/Bitcoin Ratio futures on July 31, pending regulatory review.

To determine the cash-settled price for the investment vehicle, the value of CME Group Ether futures final settlement price will be divided by the corresponding CME Group Bitcoin futures final settlement price, the release said.

“Historically, ether and bitcoin have been highly correlated; however, as the two assets have grown over time, market dynamics may affect the performance of one more than the other, creating relative value trading opportunities,” said Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products. “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.”

Vicioso said the new contract creates an efficient, cost-effect way for investors to hedge their cryptocurrency holdings or execute other trading strategies.

“The launch of Ether/Bitcoin Ratio futures completes the currency triangle allowing market makers such as XBTO the ability to arbitrage synthetically, for the first time, all three futures legs: the BTC/USD and ETH/USD dollar legs, and the ETH/BTC cross,” said Paul Eisma, Head of Options Trading at XBTO. “CME Group's innovative, regulated product will help increase volumes, reduce spreads, and give institutional crypto market participants a vehicle to express relative value between BTC and ETH.”

CME Group has been steadily adding to its suite of digital asset products over the past year as institutions looked to capitalize on lower token prices while the market languished in bear market territory.

Last August, the firm announced that it intended to launch options trading for Ether futures beginning Sept. 12. Later that month, it revealed plans to roll out Euro-denominated Bitcoin and Ether futures in an effort to give institutional investors another option to acquire the top two cryptos in a regulated manner.

HSBC Hong Kong enables trading of three Ether, Bitcoin ETFs

In March, CME Group launched Bitcoin futures events contracts, giving traders access to daily options on futures that are valued up to $20 per contract and enabling them to know their maximum profit or loss when entering a trade. And in May, the firm launched new options contracts for Bitcoin and Ether futures with daily expirations to complement its pre-existing monthly and quarterly expiries for those products.

With the launch of Ether/Bitcoin Ratio futures, CME Group has shown that it remains dedicated to providing access to digital asset products that are in high demand from retail and institutional investors.

“This new ETH/BTC cross-cryptocurrency contract from CME Group should allow investors more flexibility when hedging positions in non-dollar offshore markets," said Brooks Dudley of Marex Capital Markets, Inc. “This marks another important advancement for CFTC-regulated cryptocurrency derivatives.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.