Another cryptocurrency on the US market

31.08.2018 14:06|Bartosz Grejner

"One year after bitcoin futures were offered, one of the US stock exchanges is likely to introduce, by the end of 2018, futures based on ether as well. This may be one of the elements the market needs to return to the growth path," says Bartosz Grejner, Conotoxia analyst.

In December 2017, the Chicago Board Options Exchange (CBOE) introduced as the first exchange futures contracts for bitcoins (BTC), and a moment later, the Chicago competitor, the CME, did the same. By coincidence, that period was also the time of the price hike of the most popular cryptocurrency - BTC cost approx. 20 thousand USD.

Will ether join bitcoin?

There were media reports about the possible introduction of contracts also for the second most popular cryptocurrency, ether (its market capitalization is about four times lower than bitcoin's). This possibility was earlier ruled out by the CME. However, the latest Business Insider reports indicate that we can expect futures contracts for ether at the end of this year on the CBOE exchange, which is expected to wait for additional explanations from the American regulator (CFTC).

The basis for the quotations will be, as in the case of bitcoin, the Gemini stock exchange of the Winklevoss brothers. They were also behind an attempt to introduce ETFs to trading this year, which was rejected twice by the Securities and Exchange Commission (SEC).

Will SEC accept ETFs for bitcoins and other cryptocurrencies? The US supervisory committee had previously pointed out a quite significant problem. It concerned the lack of evidence that cryptocurrency funds could be prevented from being manipulated. In short: liquidity in the market is still too low. However, additional futures based on ether may change the situation slightly.

Situation has changed. No boom for now

It should be stressed, that apart from the initial contribution to the increase in bitcoin prices, trading in futures contracts listed on the two aforementioned exchanges has been gradually abandoned. It was caused by: rapid drops of overvalued cryptocurrencies and falls of stock exchanges, hacker attacks or tighter regulations against cryptocurrencies in some countries.

Futures on ether will be offered in completely different conditions. The market evolved into a more mature one and is somewhat more resistant to speculative movements, at least in the case of the largest cryptocurrencies. This can be a chance for both ether and the other cryptocurrencies. The high level of trading in contracts may also boost bitcoin a bit. What is important, ETF funds will most likely not be listed on the official stock exchanges before the contracts on the ether. And it’s ETFs that would have a chance to significantly increase the demand for cryptocurrencies, increasing the growth pace of their prices. That is why it is most likely that a repeat of last December and a crazy increase in prices will not be achieved.

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