JPMorgan: CME Ether Futures Can Lead to “Negative Price Dynamics” Similar to Bitcoin (BTC) in 2018

By Bhushan Akolkar
February 3, 2021 Updated February 3, 2021
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Ethereum (ETH) price has rallied all the way to a new all-time high above $1550 levels in a move backed by new purchases from the Grayscale Ethereum Trust (ETHE). There’s a lot of frenzy building up around the surge in ETH price with the launch of CME Ether Futures in a week’s time.

CME Ether Futures Excitement May Soon Fizzle out

However, JPMorgan and some other players think that the excitement around the CME Ether Futures launch may soon fizzle out. Nikolaos Panigirtzoglou, global market strategist with JPMorgan Chase & Co said that Ether Futures can lead to “negative price dynamics”.

Ethereum has already surged 8x times over the last year. Besides, the craze around decentralized finance (DeFi) has already skyrocketed the use of ETH by manifold times. Thus, speculators may look to ride the current momentum for some quick gains.

Apart from JPMorgan, the Federal Reserve Bank of San Francisco believes that the launch of derivatives will open up new doors for bearish investors. The bank compares this situation with Bitcoin’s 2017 and CME futures launch that gave traders the opportunity to hedge the crypto asset. As reported by Bloomberg, back in 2018, the Federal Reserve Bank of San Francisco released a similar analysis stating:

“The rapid run-up and subsequent fall in Bitcoin after the introduction of futures “does not appear to be a coincidence,” adding that the contracts “allowed pessimists to enter the market, which contributed to the reversal of the Bitcoin price dynamics.”

However, Vijay Ayyar, head of Singapore-based crypto exchange Luno says that ETH might not face a similar fate to that of Bitcoin. Giving a plausible explanation, he notes:

“For all you know, major players may be looking to get long exposure through futures, now that there is an institutional-grade product to do so. Smart traders moved to Ether when Bitcoin topped out around $40,000 and have made more money.”

Ethereum Fundamental All Point for A Strong Rally

Well, if we see, several on-chain metrics and fundamental points for a price surge ahead for Ethereum ahead. Below are some of the fundamentals favoring ETH price rally.

  • The Grayscale Ethereum Trust (ETH) has started purchasing ETH once again after opening the trust once again for new investments.
  • The ETH supply at exchanges has reduced significantly since the beginning of 2021.
  • Ethereum gave the highest ever monthly close in January 2021.
  • New investors have been joining the Ethereum network at the fastest rate ever.
  • The total value of ETH staked with Ethereum 2.0 has reached over $4 billion showing strong investor confidence.
  • Galaxy Digital is coming up with its own Ethereum funds this month ahead.

Let’s know what do you think about the future price action in ETH.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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