The ETH/BTC ratio futures will be a new product from CME Group, the world’s leading derivatives platform, pending regulatory approval. These futures will allow traders to bet on the relative performance of ether and bitcoin, the two largest cryptocurrencies by market capitalization. Unlike other futures contracts, these futures will not involve the delivery of the underlying assets, but rather a cash payment based on their prices.
The cash payment will be calculated by dividing the final settlement price of CME Group Ether futures by the final settlement price of CME Group Bitcoin futures.
The settlement cycle of the ETH/BTC ratio futures will be aligned with the CME Group Bitcoin futures and Ether futures contracts. This was announced by Giovanni Vicioso, the Global Head of Cryptocurrency Products at CME Group, who said:
“Historically, ether and bitcoin have been highly correlated; however, as the two assets have grown over time, market dynamics may affect the performance of one more than the other, creating relative value trading opportunities. With the addition of Ether/Bitcoin Ratio futures, investors will be able to capture Ether and Bitcoin exposure in a single trade, without needing to take a directional view. This new contract will help create opportunities for a broad array of clients looking to hedge positions or execute other trading strategies, all in an efficient, cost-effective manner.”
Advantages of the Ether/Bitcoin Ratio Futures
EBR futures (Ether/Bitcoin Ratio) allow traders to easily compare the value of Ether futures (ETH) and Bitcoin futures (BTC) in one transaction. This new contract gives investors a chance to access cryptocurrencies without having to predict their direction.
EBR futures let traders express their views on how the two cryptocurrencies differ in value, no matter what they think of the overall cryptocurrency market. The ratio futures have the symbol EBR on CME Globex, and the ratio is calculated by dividing the price of Ether futures by the price of Bitcoin futures.
The EBR Final Settlement price is a ratio of the Final Settlement Prices of Ether futures and Bitcoin futures. It uses the same expiration month for both underlying futures contracts. The ratio is positive and valid for all listed contract months. The contract’s notional value is the ratio times $1,000,000.
