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CME Group Launching Euro Crypto Futures

2 mins
Updated by Ryan Boltman
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In Brief

  • CME Group plans on launching Euro futures contracts for Bitcoin and Ethereum.
  • “Euro-denominated cryptocurrencies are the second highest traded fiat behind the US dollar,” according to the global head of equity and FX products at CME.
  • By enabling traders to hedge their cash positions in digital currency, futures have become more popular amid the tumultuous crypto markets.
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The owners of one of the world’s largest derivative exchanges announced that they will be offering two new futures products based on cryptocurrencies.

CME Group Inc. plans on introducing Bitcoin and Ethereum futures contracts denominated in Euros on August 29, pending regulatory review, the company announced in a press release. These latest futures products will be sized at five Bitcoin and 50 Ether per contract. Each will be settled by cash using the daily CME CF Bitcoin-Euro Reference Rate and CME CF Ether-Euro Reference Rate, respectively.

“Euro-denominated cryptocurrencies are the second highest traded fiat behind the US dollar,” said Tim McCourt, global head of equity and FX products at CME. “Year-to-date, the EMEA region represents 28% of total Bitcoin and Ether futures contracts traded, up more than 5% versus 2021.”  

Drawing on uncertainty

The products come as the crypto markets continue to struggle, with Bitcoin down about 50% so far this year, and Ethereum down 56%. This prolonged state of volatility is perhaps what has drawn investors to crypto futures, which allow traders to hedge their cash positions in digital currency. 

“Ongoing uncertainty in cryptocurrency markets, along with the robust growth and deep liquidity of our existing Bitcoin and Ether futures, is creating an increased demand for risk management solutions by institutional investors outside the US,” McCourt explained.

However, current trading volumes on the crypto derivatives market dwarfs that of spot trading. This could potentially contribute to great market instability since futures contracts can intensify the volatility of a given market sentiment. For instance, when Bitcoin plummeted up to 30% in May 2021, leveraged-up positions in futures and options were liquidated, which then amplified the selloff.

The world’s largest financial derivatives exchange launched micro options for Bitcoin and Ethereum earlier this year. CME Group said the contracts would represent one-tenth of each cryptocurrency and be open not only to institutional but also retail traders, for whom the instruments were designed.

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Nicholas Pongratz
Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.
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