A Future for Ethereum Futures
Crypto Facilities, a fully-regulated cryptocrruency exchange based in London, is now offering Ethereum futures contracts. At 4:00pm GST on May 11th, the exchange became the first licensed organization to provide Ether derivatives trading, representing a significant step towards institutional maturation for the nascent cryptocurrency market. Investors will now be able to go long or short on the underlying asset without any regulatory concerns.
ETH will become the third crypto derivative offered on the platform, joining BTC and XRP. Crypto Facilities has brought on Chicago-based Akuna Capital and London-based B2C2 to shore up all liquidity requirements.
Timo Schlaefer, the founder of Crypto Facilities, is bullish on the offering’s impact towards consumer crypto adoption.
“Ether is the second most liquid cryptocurrency after Bitcoin, trading in the billions of dollars daily, and we are excited to be launching ETH futures. The Ethereum network is the pre-eminent blockchain for smart contracts, and we believe this new trading instrument will attract more investors and bring greater liquidity to the marketplace.”
Further, the recent controversy surrounding Ethereum’s 2014 token sale is of no apparent concern to Mr. Schlaefer, who claims, “Whether Ethereum is a security is a matter for different jurisdictions to decide. Crypto Facilities is a derivatives platform and complies with the applicable regulation.”
However, there are still other concerns to consider. Many fear these instruments will catalyze more volatility in a market fraught with speculation and bad actors. These fears are borne from a recent study by the Federal Reserve Bank of San Francisco linking Bitcoin futures to the January market meltdown. The WSJ recently cited this study in a recent article, demonstrating a strong correlation between the launch of Bitcoin futures and the subsequent cryptocurrency market collapse.
“The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence…[it] is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset,” the article reads.
For all of you Ether HODLers out there, don’t fret too much. Most analysts believe that higher liquidity and fewer barriers to entry are beneficial to mass adoption and should provide price support in the long-term.
You can read the full announcement here.