Here’s how Eth2, DeFi and Bitcoin price will impact Ethereum’s CME futures


The bad Bitcoin (BTC) futures launch in December 2017 quickly fell short of investor expectations, and although the CME BTC market had surpassed $ 2.5 billion in open interest, the initial launch reinforced the narrative that the launch of CME ETH futures this week would be Equally bearish in the short term.

Ahead of the CME BTC futures launch, Bitcoin had already gained 1,900% for the year, a rally that some analysts argue is driven by the expectation of regulated futures.

Now that the CME ETH futures are launched, investors are watching closely to see if Ether (ETH) faces a similar situation as it has already risen by 600% over the past year.

As of now, there is no way to estimate how Bitcoin will perform without CME and CBOE futures. However, traders still tend to link the CME launch to the 70% collapse in BTC price that occurred in the first three months after the launch.

Analyzing a variety of commodities and forex contracts over the past two decades may provide a better perspective on this issue, so we will review data from the historical CME First Trade History Index to see if there is a clear price trend occurring after the CME listings.

Crude palm oil

Prices for crude palm oil. Source: Worldbank.org

When crude palm oil futures were launched on the Chicago Mercantile Exchange in May 2010, they did not affect the continued price recovery as the data above suggests. Similar contracts have already been around for nearly a decade at NYMEX, so the above event may have less significance given that both exchanges do business with institutional clients.

Multiple factors could have caused palm oil prices to spike following the launch of CME, including the positive 23% performance for WTI oil over the next five months.

South Korean won

Likewise, South Korean won futures were listed in September 2006 and in this case the launch appears to have had an immediate effect on the price.

South korean won / US dollar spot rates. Source: TradingView

Although there is no futures contract, non-deliverable futures (NDF) for South Korean color were already in place prior to the CME listing. These NDF contracts are usually traded over the counter (OTC) and rarely transferred between investors. This means that the listed forward contract has a greater number of institutions that may participate.

Once again, it is impossible to estimate whether the launch of this forward contract has an immediate effect on the price. It is possible that the devaluation of the South Korean won has followed the trend of emerging economies or Asian economies. Therefore, pinning this move to the CME futures launch appears to be an extension.

How do you fare the goods?

Both Ether and Bitcoin are usually considered a scarce digital commodity, so it makes sense to compare it to other previous CME releases.

Returning to commodities, Diamonium Phosphate Fertilizer (DAP), a widely used fertilizer, held its first futures contract in June 2004.

Diammonium Phosphate (DAP) prices. Source: Worldbank.org

Prior to the launch of the Chicago Mercantile Exchange, the Chicago Board of Trade (CBOT) held these contracts since 1991. However, there is potential evidence of price dumping prior to listing. However, for those analyzing a wider time frame, the listing itself seemed to be a price trigger rather than a negative thing.

South African coal futures

Spot South African coal prices. Source: Worldbank.org

Coal futures contracts began trading in July 2001 on the Chicago Mercantile Exchange, and, unlike previously discussed examples, did not have a listed agent on other exchanges. Similar to Bitcoin, there has been a 50% rally in the year-and-a-half prior to its emergence.

The result mimics the inclusion of Bitcoin, as the commodity is down 33% over the next twelve months.

In conclusion, there is no specific trend that allows listings to predict the performance of assets after the CME listing. Several historical events lined up, and no concrete pattern has been found.

Not every futures contract accumulates related liquidity and the de-listing of CBOE Bitcoin futures proves this point.

At this point, it is safe to conclude that Ether’s future price performance will depend on a combination of factors such as Eth2’s performance and its critical role in the DeFi sector.

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