CME Group Euro-Denominated Bitcoin and Ethereum Products Go Live

Updated by Kyle Baird
In Brief
  • CME Group's cash-settled euro-denominated BTC and ETH derivatives products go live.
  • Trading volumes in derivatives markets far exceed volumes in spot markets.
  • CME operates about 4% of the global derivatives market.
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CME Group Inc. has launched new euro-denominated Bitcoin and Ethereum futures contracts as derivative markets continue to show healthy trading volumes.

First announced on Aug. 4, 2022, the new bitcoin futures contract will be set at five bitcoin and the new Ethereum futures contract at 50 ether.

They will be cash-settled, meaning that U.S. dollars will be exchanged between the buyer and seller on the contract’s expiration date instead of the buyer receiving bitcoin. The cash settlement will be done using the CME CF Bitcoin-Euro Reference Rate and the CME CF Ether-Euro Reference Rate.

Built on a solid foundation

The new futures contracts arrive during a challenging period for cryptocurrencies, with bitcoin prices currently down 70% from its November 2021 all-time high and Ethereum hovering around $1,500, down over 66% in the same period.

According to Tim McCourt, Global Head of Equity and FX Products at the CME Group, the launch of the new euro-denominated contracts is built on the foundation of solid growth and deep liquidity in the dollar-denominated contracts. The new contracts will provide local and international clients with “more precise and regulated tools” to hedge exposure to the two largest cryptocurrencies in the world.

Derivative products see larger trading volumes

Crypto derivative products are seeing larger trading volumes than spot products, rising to $3.1 trillion in July 2022 compared to $1.3 trillion for spot trading. Binance and FTX have seen trading volumes of $54 billion and $7 billion in the last 24 hours, according to Coingecko. Coinbase recently launched a bitcoin ‘nano futures’ contract through its acquisition of FairX, a company specializing in derivative products.

Larger crypto exchanges have purchased smaller companies, hoping to leverage the license they hold with the Commodities and Futures Trading Commission to offer leverage on spot crypto products. Exchanges allow users to borrow capital called leverage to boost their trading position, a popular strategy in retail investing.

CME is the only regulated bitcoin futures marketplace in the U.S., having a trading volume of about 4% of the global derivatives market in July 2022.

It launched micro bitcoin and ether futures contracts, setting the contract at 1/10 of a BTC last year to attract investors with less capital.

On Aug. 18, 2022, the CME Group announced its upcoming ETH Options as interest in its standard and micro-sized Ethereum futures contracts surged in anticipation of the upcoming Merge.

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