Ether seeks to escape bitcoin's shadow with CME futures launch

[webfact]

Ether seeks to escape bitcoin's shadow with CME futures launch

By Gertrude Chavez-Dreyfuss

 

FILE PHOTO: Representation of the Ethereum virtual currency standing on the PC motherboard is seen in this illustration picture, February 3, 2018. REUTERS/Dado Ruvic/Illustration

 

NEW YORK (Reuters) - Futures on ether, the second largest cryptocurrency in terms of market capitalization and daily volume, will launch late Sunday on derivatives exchange CME, as investors seek to take advantage of mounting institutional interest in this evolving asset class.

 

Ether, which has long lived in bitcoin's shadow, is the digital currency or token that facilitates transactions on the ethereum blockchain. In the crypto world, the terms ether and ethereum have become interchangeable.

 

While bitcoin is the preferred store of value in the digital ecosystem, ethereum has emerged as the leading financial infrastructure, settling more than $12 billion in daily transactions, according to digital asset manager GrayScale's latest report.

 

The CME listing allows investors to diversify crypto holdings outside of bitcoin and provides an avenue for investors to hedge their ethereum exposure, opening a market where bearish positions on the asset can be readily expressed.

 

Ether futures, which follow those of bitcoin's listing in December 2017, will be cash-settled and will be priced based on a CME reference rate that draws data from major cryptocurrency exchanges Bitstamp, Coinbase, Gemini, itBit, and Kraken.

 

Investors don't expect huge volumes out of the gate, much like when bitcoin futures launched three years ago, but the asset should gain traction as an easy way to get access to another crypto-based network, said John Wu, president of AVA Labs, an open-source platform for creating financial applications using blockchain technology.

 

"This will introduce new people and organizations to crypto and to the programmable smart contract side of the ecosystem, rather than just a store of value and digital gold," Wu added.

 

Smart contracts are self-executing transactions.

 

Ethereum hit a record high of $1,764.55 on Friday, ahead of its futures launch, which helped boost the crypto sector's market cap to about $1.2 trillion, according to data tracker CoinGecko.com. It was last up 8% at $1,729.59.

 

(Graphic: Ethereum on the rise: https://fingfx.thomsonreuters.com/gfx/mkt/dgkvlknropb/ethereum.PNG)

 

Bitcoin, the largest cryptocurrency, was up 2.5% at $37,892. It hit a record high of $42,000 on Jan. 8.

 

Since the launch of bitcoin futures three years ago, the CME has noted significant growth in their adoption from a broad array of participants, including institutional investors.

 

Since the beginning of 2020, a total of 8,560 CME bitcoin futures contracts, equivalent to about 42,800 bitcoins, have traded on average per day, the CME said in a statement. Institutional interest has also increased, with the number of large open interest holders reaching a record of 110 in December.

 

The latest CME data also showed bitcoin's net shorts of 2,781 contracts last week were the smallest since late November.

(Graphic: Bitcoin futures vs asset price:

 

https://fingfx.thomsonreuters.com/gfx/mkt/nmovaoexeva/Bitcoin futures.PNG)

 

JP Morgan in a research note suggested that ether futures' listing could be followed by a fall in the price of the underlying currency, much like what happened when bitcoin futures started trading. The new contracts will enable holders of physical ethereum to hedge their exposure.

 

Global investors have started pouring cash into ethereum funds and products, with about $56.1 million in inflows in January, according to a report on institutional flows from digital currency manager CoinShares. Bitcoin remains the recipient of the bulk of overall investor flows or 92%, equivalent to nearly $2 billion in January.

 

Ethereum in 2020 attracted investor flows of $926 million, while bitcoin had $4.5 billion.

 

(Reporting and graphics by Gertrude Chavez-Dreyfuss. Editing by Alden Bentley and Mark Potter)

 

-- © Copyright Reuters 2021-02-08

 

- Whatever you're going through, the Samaritans are here for you

- Follow Thaivisa on LINE for breaking COVID-19 updates

[techietraveller84]

Ether, Bitcoin and the rest are making the financial sector fun again.

[fdsa]

Lol. Ethereum is already more expensive for daily use than Bitcoin because ETH transaction fees are close to 10 USD while BTC transaction fees are less than 5 USD, and with all those massive players incoming ETH price will pump even higher thus ETH will become a store of value rather than a mean of payment. Same as Bitcoin currently.

[ukrules]

They think this is good news, it's not. It just opens up a massive conduit for price manipulation and accumulation on a large scale.

[Nout]

Have acquired a digital currency by buying it with a fiat currency how does one convert it back to fiat currency?

[Nout]

6 hours ago, Nout said:

Have acquired a digital currency by buying it with a fiat currency how does one convert it back to fiat currency?

No answer. Having acquired a digital currency by buying it with a fiat currency how does one convert it back to fiat currency?

[fdsa]

22 minutes ago, Nout said:

No answer. Having acquired a digital currency by buying it with a fiat currency how does one convert it back to fiat currency?

No answer because of lame question. Convert it back using the very same method as you bought it, be it online exchange or crypto-ATM machine or personal meeting or whatever else.

[DeepSea]

On 2/8/2021 at 9:53 PM, fdsa said:

No answer because of lame question. Convert it back using the very same method as you bought it, be it online exchange or crypto-ATM machine or personal meeting or whatever else.

 

Respectfully, the question isn't as lame as you might think on first reading.

 

Until such time and Visa and MasterCard ramp up a reliable, trusted mechanism to cash out directly into Fiat through regular ATM's (as opposed to cashing out through an exchange), the options for cashing out of Crypto are limited.

 

Crypto ATM's are one option, but the majority of Altcoins are not supported, so if your'e holding Alts, you will still need to get onto an exchange and exchange them for Bitcoin, Litecoin, Ethereum etc. (supported coins) to facilitate cashing out.

 

Personal transactions are possible (such as LocalBitcoins dot com) but seller beware, there have been reported incidents of fraud.

 

If moving Alts onto an exchange to change into Bitcoin, or for cashing out directly to Fiat there may also be issues. During the rush to cash out into Fiat or Stable Coins at the end of 2017, this problem was exacerbated, as transaction times to move Crypto from cold wallets back onto exchanges were protracted. The exchanges employed a further method of slowing things down as many of the exchange wallets were then mysteriously 'offline for maintenance' for protracted periods, which meant people couldn't cash out, unless they moved to another exchange. You then need to consider capital gains liability, depending on your location/nationality and the reporting requirements of the exchange, at the time you cash out of Crypto, back into Fiat.

 

I'd like to suggest another possible Crypto off-ramp which may not be immediately obvious to Crypto holders, which i have used myself for the past 5 years, which is to cash out of Crypto directly into precious metals.

 

The company I'm referring to has physical locations in Singapore and have just opened a store in New Zealand. They have been in business in SG since 2009 (providing precious metals analysis), they began trading and offering vault storage in 2013, opened their first physical store in 2014 (at which time they became one of the first bullion dealers worldwide to accept Bitcoin for precious metals settlement - they now also accept Litecoin, Ethereum and Bitcoin Cash). There is a spread and premium on the purchase of precious metals, which can be traded back and forth with them, placed in vault storage, safe deposit box storage (since the end of last year), and physically drawn from their store or sent to you by secure courier as you wish (the last option perhaps not for Thailand) they have insured, audited vaults and there are no bullion taxes or reporting requirements in both the SG and NZ locations. You can see their timeline and browse their website here. Just another Plan B option for Crypto holders to consider.

 

 

Edited February 23, 2021 by DeepSea

[DeepSea]

I forgot to mention, that their analysts regularly have Precious Metals opinion pieces published on Zerohedge which is one of the most well known trader/finance news sites in the U.S. here's a link to an opinion piece on the recent silver squeeze.

[fdsa]

1 hour ago, DeepSea said:

You can see their timeline and browse their website here.

> https://www.bullionstar.com/story?r=765

what is that little "r=" about?

It is a bad etiquette to provide referral links without stating that.

Edited February 23, 2021 by fdsa

[DeepSea]

4 hours ago, fdsa said:

> https://www.bullionstar.com/story?r=765

what is that little "r=" about?

It is a bad etiquette to provide referral links without stating that.

Not trying to hide anything but didn't realize there was an etiquette to posting referral links ????

 

Having said that, I spent long hours trawling the internet looking for a PM vendor who accepted Crypto before finding them. At that time they had only been operating for about a year and I would have been grateful if somebody flagged them to me. They give me a very small bump for passing their info on, which I'm happy to do as their service is pretty damn good, doesn't affect the purchase price of PM's to the buyer.

 

[simon43]

Glad to see Ether finally increasing in value.  I bought some around 2018, and have been sitting on it......

 

BTW, anyone want to offer to buy my 100,000 Pandacoins? !