CME to Launch Ether/Bitcoin Ratio Futures
Posted by Colin Lambert. Last updated: June 30, 2023
CME Group has announced plans to extend its cryptocurrency offerings with the launch of Ether/Bitcoin Ratio futures contracts on 31 July, pending regulatory review.
“Historically, ether and bitcoin have been highly correlated; however, as the two assets have grown over time, market dynamics may affect the performance of one more than the other, creating relative value trading opportunities,” says Giovanni Vicioso, CME Group global head of cryptocurrency products. “With the addition of Ether/Bitcoin Ratio futures, investors will be able to capture ether and bitcoin exposure in a single trade, without needing to take a directional view. This new contract will help create opportunities for a broad array of clients looking to hedge positions or execute other trading strategies, all in an efficient, cost-effective manner.”
The new futures will be cash-settled to the value of CME Group Ether futures, divided by the corresponding CME Group Bitcoin futures final settlement prices and will follow the same listing cycle as those contracts.
“The launch of CME Group Ether/Bitcoin Ratio futures further expands the marketplace for institutions and sophisticated investors who want digital asset exposure in a regulated environment,” says Jason Urban, global head of trading at Galaxy. “This product will appeal to investors looking to take advantage of changes between the two biggest digital assets by market capitalisation. We commend CME Group’s ongoing commitment to developing innovative offerings essential to building an enduring ecosystem for this asset class.”
Paul Eisma, head of options trading at XBTO, adds, “The launch of Ether/Bitcoin Ratio futures completes the currency triangle allowing market makers such as XBTO the ability to arbitrage synthetically, for the first time, all three futures legs: the BTC/USD and ETH/USD dollar legs, and the ETH/BTC cross. [This] regulated product will help increase volumes, reduce spreads, and give institutional crypto market participants a vehicle to express relative value between BTC and ETH.”
Brooks Dudley of Marex Capital Markets, observes how the new contracts “should allow investors more flexibility when hedging positions in non-dollar offshore markets”, adding the release “marks another important advancement for CFTC-regulated cryptocurrency derivatives.”