Ethereum futures are set to hit the markets next year and traders are wondering if they could have the same initial effect on ETH/USD that Bitcoin futures had on BTC/USD. The digital currency is currently the second-largest cryptocurrency with a market cap of $14,285,029,568 and is third on the volume rakings ($9,865,011,248 ave) behind Tether and Bitcoin. The one issue I have with cryptocurrency derivatives is the fact it could take volume away from the underlying asset. Some say this is a good thing as it takes away some of the so-called "not so serious" traders away from the markets.
Ethereum Futures Release Date
Heath Tarbert is the Chairman of the Commodity Futures Trading Commission (CFTC) and he noted:
It is my view as Chairman of the CFTC that Ether is a commodity, and therefore it will be regulated under the CEA. And my guess is that you will see in the near future Ether-related futures contracts and other derivatives potentially traded.
Although there has been no official date given, Heath Tarbert said he thinks it could happen between six and twelve months when he was interviewed back in October.
Just like Bitcoin, the hope is having a regulated futures product would bring more institutional players to the market. Ethereum futures already exist on the BitMEX and Binance exchanges but they are not regulated by a body like the CFTC and traded on an exchange with the reputation as large as the CME.
Bitcoin Futures started trading at the Chicago Mercantile Exchange (CME) on December 18th 2018, on that day BTC/USD opened in London at 3,497.10. Six days later BTC/USD traded as high as 4,239.37, so it clearly has some effect.
Ethereum Price Action
Over a long term basis, ETC/USD is in a serious downtrend for months. In late June the pair was trading at 363.29 and at the moment the major support is 120.00 that’s a fall of just over 67%. ETC/USD is also trading under both the 55 and 200 daily EMA's, which is also a pretty bearish sign. The next support is at the 100 psychological and if that is breached it would be a massive bearish signal and a big win for the bears. The pattern on the chart is a massive descending wedge formation. For now, it seems that the price is respecting the pattern and the downtrend will remain intact. Longer-term for bulls to break charge a break of the trendline is needed and the 200 psychological resistance may need to be broken along with the 200 period EMA.
 (1)-637127232961661857.png)
Ethereum 2.0
Ethereum 2.0 genesis block is launching on January 3, 2020, to mark Bitcoin’s 11-year anniversary, It is being made by developers who are targeting a deposit amount of 2 million ETH before the genesis block. Ethereum 2.0, also known as Eth2 or Serenity, will bring Sharding, Proof of Stake (PoS), a new virtual machine (eWASM) and is said to have many more innovations. At the start it is important to know that this upgrade will take place in a few phases. This update will be focused on ensuring that the Beacon Chain (Phase 0) is stable and ready for implementation of Phase 0 sharding. This includes numerous clean-ups, bug fixes, enhanced tests, and networking updates in its changelog.
What to expect in 2020
It will take a mammoth effort from the bulls to create a change in fortunes for ETH/USD. The market is in a serious downtrend and the general crypto volume and sentiment has been weakening over the last few months. If Ethereum Futures do come to market I doubt it will have a material effect on ETH/USD price action. The market is used to Bitcoin futures and the move higher after the release Bitcoin futures may not be replicated in Ether. However, the release of Ethereum 2.0 could be a big deal. Whenever a technological advance takes place it is good news for the cryptocurrency involved. Although it is hard to say how the market will react the event is definitely one to watch.
More crypto derivatives do not really help the price of the underlying asset. If CFD's, options, futures and other derivatives become more popular then the volume will be even lower on the physical crypto exchanges. Either way, positive sentiment might return to the crypto sphere and the growth of the DeFi market and crypto payments market could be key.
This article belongs to the 20 trading ideas for 2020 series. Check the full list of 2020 pieces.
All information and content on this website, from this website or from FX daily ltd. should be viewed as educational only. Although the author, FX daily ltd. and its contributors believe the information and contents to be accurate, we neither guarantee their accuracy nor assume any liability for errors. The concepts and methods introduced should be used to stimulate intelligent trading decisions. Any mention of profits should be considered hypothetical and may not reflect slippage, liquidity and fees in live trading. Unless otherwise stated, all illustrations are made with the benefit of hindsight. There is risk of loss as well as profit in trading. It should not be presumed that the methods presented on this website or from material obtained from this website in any manner will be profitable or that they will not result in losses. Past performance is not a guarantee of future results. It is the responsibility of each trader to determine their own financial suitability. FX daily ltd. cannot be held responsible for any direct or indirect loss incurred by applying any of the information obtained here. Futures, forex, equities and options trading contains substantial risk, is not for every trader, and only risk capital should be used. Any form of trading, including forex, options, hedging and spreads, contains risk. Past performance is not indicative of future FX daily ltd. are not Registered Financial Investment Advisors, securities brokers-dealers or brokers of the U.S. Securities and Exchange Commission or with any state securities regulatory authority OR UK FCA. We recommend consulting with a registered investment advisor, broker-dealer, and/or financial advisor. If you choose to invest, with or without seeking advice, then any consequences resulting from your investments are your sole responsibility FX daily ltd. does not assume responsibility for any profits or losses in any stocks, options, futures or trading strategy mentioned on the website, newsletter, online trading room or trading classes. All information should be taken as educational purposes only.
Recommended Content
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.