Ethereum futures from Chicago Mercantile Exchange (CME) Group have finally arrived, and trading is off to a healthy start, with more than $30 million in futures contracts traded in the first 24 hours after launch.
CME ETH futures launched yesterday, February 9, adding the second largest crypto by market cap to the world’s largest and oldest futures exchange group, joining Bitcoin in an exclusive club of digital assets with strong enough foundations to find a place in traditional futures markets.
CME added in December 2017, the very same week BTC prices hit a previous bull run all-time high just shy of $20,000. Now, futures are open for trading, with February and March futures trading at $1,769 and $1,804, respectively.
Futures contracts represent obligations to buy or sell an asset at a given price on a predetermined future date, and can be bought and sold like stock and other market-traded assets. That allows individuals or companies to bet that the market price will be higher or lower than the contract price at execution, allowing them to profit from the difference.
Futures contracts are also commonly used as hedging instruments; if a business knows they need to buy a specific amount of Ethereum at a given upcoming date, futures contracts are a good way to lock in a known price in advance.
CME Ethereum and futures are cash-settled instruments, meaning the difference between spot prices and executed contract prices are paid in cash, rather than any actual crypto changing hands.
On the first day of ETH trading, contract issuers generated approximately $20 million in open interest, a measure of contracts available to be bought and sold. Total volume reached above $30 million, as traders got their feet wet buying and selling ETH futures to try to determine the appropriate pricing.
CME is not the first to offer Ethereum futures trading, with exchanges like Binance, Deribit, OKEx and several others having added ETH futures trading since the 2017 bull market. But the CME launch marks a major milestone for Ethereum, offering institutional investors and risk-averse corporations a new path to exposure to the native asset of the largest decentralized development platform in crypto.