- CME Ethereum futures were launched three weeks ago and during that time the cryptocurrency hit an all-time high before retreating sharply.
- This price movement is similar to Bitcoin which hit a record high a few days after the launch of its futures contracts, before the start of the worst bearish race in the market.
When Ethereum futures launched on the Chicago Mercantile Exchange (CME) in February, the cryptocurrency industry was in turmoil, however, over the next three weeks, Ethereum followed a pattern too similar to Bitcoin's. The second largest cryptocurrency has reached a newto all-time high before retracing and recording a monthly low.
A futures contract is an agreement between a buyer and a seller to exchange an asset at a fixed price at a future date. They allow investors to bet on future movements in the price of Ethereum without purchasing the cryptocurrency.
Ethereum futures contracts launched at CME on February 8. Back then, the cryptocurrency was trading at $ 1,600. It had hit a record high price of $ 1,750 just days before. After the launch of futures, the cryptocurrency soared to its new all-time high at $ 2,037 on February 20. Since then, Ethereum has lost 25.4% to now trade $ 1,520.
The CME Futures Curse
Ethereum followed a similar path to Bitcoin, which was the first to launch on the CME futures market. BTC futures were launched at CME on December 17, 2017. At the time, Bitcoin was profiting from itsbest performance to date, trading at an all time high above $ 20,000 for the very first time. A week earlier, BTC futures were also launched on the Chicago Board Options Exchange (CBOE).
After launch at CME, Bitcoin began to enter a downward spiral which was the start of its worst bearish run. Some have argued that Bitcoin has effected a natural market correction, independent of futures contracts.
Ethereum has taken a similar path, as CoinDesk Research noted. “Ethereum has underperformed BTC since launching its CME futures and gained momentum during the recent cryptocurrency sell-off. [It was] a similar situation in BTC, which underperformed ETH after launching its CME futures in 2017 ", indicated .
When the Ethereum futures have been launched, some experts argued that the cryptocurrency will not take after Bitcoin. They claimed the market has matured and will not be shaken by a few institutional investors. Ryan Watkins, an executive at the company Messari researcher, was one of them. He called the fear of the future to come "ridiculous.
"Not only does this fear come from a single data point, but it does exist. also clear differences between market conditions in December 2017 and current market conditions. Also don't think that institutions want to cut ETH "he said .
Qiao Wang , member of the DeFi Alliance and renowned market observer, is alsoObsessed with any suggestion that Ethereum would suffer a similar fate to Bitcoin. He claimed that Ethereum was on its way to $ 20,000 regardless of the launch in the future.