Ether Futures Debut on CME Group Next Week to Mark a Local Top?
JPMorgan strategist sees the listing of Ether futures result in “negative price dynamics,” but the market is saying something else.
In its price discovery, Ether has hit a new all-time high of $1,700.
Four days into February and the second-largest cryptocurrency has surged 34%. In 2021 so far, Ether is up 120% compared to Bitcoin’s 27%.
Ethereum tends to outperform Bitcoin as it is now doing, as did last year and during the 2017 bull market as well.
With Grayscale back to buying ETH for its clients, having bought 71.8k in just the last two days, it all spells more upward momentum for Ether price.
However, the imminent launch of CME Group futures for Ethereum on February 8 has traders expecting the market to behave like ‘buy the rumor, sell the news.’
“We are pumping into Eth CME…I think that will mark a local top,” said trader CryptoMessia. However, he still expects Ether to pump after the launch, but that might not come without a correction, which could be like the last bull market and be a 30% pullback.
But this pullback is not to come until the local top, which is to be seen where it will be. CryptoMessiah sees Ether above $2,000.
A Repeat of 2017?
Some market participants are also expecting a bearish market structure as a repeat of 2017, when the debut of Bitcoin futures coincided with a peak in the leading digital asset.
JPMorgan Chase strategist also expects something along the bearish lines as Nikolaos Panigirtzoglou, global market strategist with JPMorgan, said the listing of Ether futures may see “negative price dynamics.”
Panigirtzoglou also expects initial volumes to be low.
Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore, however, is not of the same opinion as he said, “For all you know, major players may be looking to get long exposure through futures, now that there is an institutional-grade product to do so.”
“Smart traders moved to Ether when Bitcoin topped out around $40,000 and have made more money,” added Ayyar.
We’re in Risk-on mode!
He points to the market becoming more mature now, the current macro environment is different from 2017, and different players, institutional investors, are involved in the market as the reasons for the same.
Moreover, “ETH remains a high beta asset. BTC determines the market direction, ETH follows,” he said.
But what he does expect is the funding rates to be “up in the clouds” if Ether prices rise to that level by Monday.
Already, in line with the surging prices, the Ether futures are trading higher than the underlying asset, which has the funding rate to keep the prices of perpetual futures closer to the spot market prices, reaching 0.1445% on BitMEX.
Long are paying the shorts the least on Deribit with funding rate on Ether futures at just 0.0016%, as per Viewbase.
For Bitcoin futures, the funding rate is between 0.0416% and 0.1255%. BTC -3.78% Bitcoin / USD BTCUSD $ 38,581.51
-$1,458.38-3.78% Volume 26.61 b Change -$1,458.38 Open $38,581.51 Circulating 18.77 m Market Cap 724.21 b 14 h “Innovative New Products” like Bitcoin Mini-Futures Leads to an Increase in CME Profits 16 h Crypto Lender BlockFi Sees Stay Of Execution In Ongoing BIA Saga 17 h Altcoins, Not Bitcoin, Drives the Latest 'Massive' Surge in Crypto Adoption: Report
While already hot, there is still room to go for these funding rates, and then price action would get extremely volatile. This “could see a replay of what happened the first time BTC traded 40K. That sort of price action becomes likely when the market gets out of whack,” said Kruger.
But what’s more important is that traditional markets are now in risk-on mode, he added.