The fear among many is that there will be a repeat of the colossal market crash that occurred after similar futures products were first launched by the massive exchange for Bitcoin in December 2017.
Futures effectively allow institutional traders to short the asset, and considering Ethereum is hovering around its all-time high, this is quite likely what the majority will do.
The Chicago Mercantile Exchange will launch its Ether Futures today, February 8, offering contract units of 50 ETH which are financially settled (paid out in USD, not ETH).
Crypto Community Reaction
In a tweet on Feb. 7, analyst Alex Krüger stated that the futures launch is bullish for overall institutional demand for Ethereum, which he added is a beta asset that follows Bitcoin.
“CME futures will allow parties that at present have difficulties accessing $ETH markets to hedge Grayscale’s $ETHE risk, driving increased $ETHE institutional demand, thus increasing spot demand and compressing the $ETHE premium.”
Messari researcher Ryan Watkins echoed the sentiment stating that market conditions are very different now than in 2017, and institutions will not be in a rush to sell ETH.
Fear of the upcoming ETH CME futures launch is ridiculous.
Not only does that fear stem from just one data point, but there’s also clear differences between market conditions in December 2017 and market conditions now.
Also don’t think institutions are itching to short ETH…
— Ryan Watkins (@RyanWatkins_) February 7, 2021
DeFi Alliance member and industry observer Qiao Wang is also on the side of the bulls and is still predicting a massive gain for Ethereum by the end of 2021.
“ETH is going to $5k-20k by the end of this. There’s absolutely no reason to sell your long term holdings here. […] And LOL @ those who think CME futures will bring ETH into a 3-year bear market. This will be the worst trade of your life.”
To add balance to the bullishness, crypto analyst and trader ‘Crypto Whale’ posted the chart after BTC futures were launched in 2017 stating that “now is not the time you should be buying into this. The bull market ends eventually, and noobs get stuck holding!”
— Crypto Whale (@CryptoWhale) February 7, 2021
Ethereum Price Outlook
At the time of press, Ethereum prices were trading flat over the past 24 hours at a little over $1,600. An all-time high of $1,760 was hit on Friday, Feb. 5, and prices pulled back to just below $1,500 during late Sunday trading before regaining some composure during Monday morning’s Asian trading session.
There could well be another correction back to heavy support around $1,300 if day traders view the CME launch as bearish. The long term outlook for ETH is still extremely positive, however.