Chicago Board Options Exchange (CBOE) has set the cryptocurrency market abuzz by telling market makers that plans are in place for pushing futures of ethereum (second largest cryptocurrency as per market capitalization).
This assertation comes from the idea that the launch of the ether futures contract will allow bears to bet against the cryptocurrency. The traders are not sure whether to classify this as a positive or a negative development considering the fact that it was the introduction of the BTC futures that marked the beginning of the fall in the BTC prices.
Futures are an agreement to buy and sell an asset on a specific future date and at a specific price while enabling investors to speculate on the BTC price without actually having town BTC. But after they came online, the price of bitcoin tanked and it's down more than 70% since hitting an all-time high at the end of 2017.
"Since December of this year, if one was bearish on any aspect of crypto but did not want to own the underlying, they could short btc", Lee said.
While Cboe is waiting for approval from the Commodities Futures Trading Commission (CFTC), crypto investors and enthusiasts have expressed relative optimism about the move. With extra regulatory safeguards, a week after Cboe launched the first ever regulated USA bitcoin futures, CME Group followed suit. Also, the market accounts for a small portion of the total BTC trading arena, so it is unlikely that BTC futures trading had any direct impact on the Bitcoin price trajectory. Since Bitcoin futures debuted in mid-December of previous year, prices tanked, with Bitcoin briefly touching $20,000 before tumbling to $7,200 as it stands today.
Putting full support of cryptocurrencies and futures, CBOE president Chris Concannon had commented earlier, "it could not stop at bitcoin" and had assured that the exchange would also add other cryptocurrency futures such as Ethereum and Bitcoin Cash, according to Finance Magnates". If you follow Business Insider, the futures will be traded on Gemini.
The launch of Ether futures would obviously be good news for the crypto industry.