ETH Futures: Bad for Ethereum, Good for Bitcoin, Says Tom Lee

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Tom Lee believes that the introduction of Ether futures trading will have opposing effects on the price trajectories of the top two cryptocurrencies. Lee’s declaration as the Cboe Global Markets gears up to launch Ethereum futures contracts in addition to its Bitcoin futures trading, which debuted in December 2017.


History Repeating Itself

According to Business Insider, Tom Lee, a managing partner at Fundstrat Global Advisors, believes that Ether futures trading will alter the price narrative of the market. Drawing from the introduction of a similar product for Bitcoin, Lee predicts that Ether 00 might follow the same trajectory.

When BTC futures debuted at the backend of 2017, Bitcoin price 00 rose to a new all-time high (ATH) of $19,700. After that, the top-ranked cryptocurrency took a nose-dive, reaching below $6,000 the following February. Presently, Bitcoin is down more than 60 percent from its mid-December 2017 ATH.

A New Stomping Ground for Bears

Lee is basing his analysis on the way cryptocurrency futures trading works – giving traders the ability to bet on the price movement of a ‘coin’ without having to own it. By this logic, ETH futures trading will provide an opportunity for bears to short Ether.

According to Lee, ETH futures will provide a new stomping ground for bears, relieving the pressure on Bitcoin. Commenting further, Lee said:

Since December of this year, if one was bearish on any aspect of crypto but did not want to own the underlying, they could short BTC. They can now short ETH, means the net short on BTC in futures would fall.

However, another point worth noting is that Bitcoin futures offered by the Cboe are cash-settled, meaning that there is no transfer of the underlying asset. Also, the market accounts for a small portion of the total BTC trading arena, so it is unlikely that BTC futures trading had any direct impact on the Bitcoin price trajectory.

The price of ETH is most likely to be directly affected by a strengthened/weakened dollar or an increase/decrease in ICO token utility.

Ethereum Futures on the Horizon

Meanwhile, indications suggest that the introduction of ETH futures is close at hand. The Cboe is reportedly waiting for SEC greenlight to launch the product officially. Back in June, the SEC cleared the air on the matter of whether Ethereum was a security. At the time, Cboe Chief, Chris Concannon, commented that the decision had paved the way for the introduction of ETH futures trading.

Do you agree with Tom Lee’s position on the impact of ETH futures on the prices of ETH and BTC? Let us know your thoughts in the comment section below.


Images courtesy of Forbes, Bitcoinist archives



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