Counterpoint: Tom Lee Says ETH Futures Will Hurt ETH Price
At the end of 2017, the Chicago Board Options Exchange (CBOE) launched Bitcoin (BTC) futures. As recently reported, the CBOE is just months away from launching Ethereum (ETH) futures. While the UseTheBitcoin staff thinks this will boost ETH price, analysts like Tom Lee think it could bring ETH prices down.
Ethereum Futures Negative for the Price
There’s been a lot of anticipation for ETH futures. Tom Lee, head of research at Fundstrat Global, hypothesized that ETH futures would help BTC, but not ETH price.
According to him, Ether futures would allow speculators to short ETH. This is similar to what happened with Bitcoin after Bitcoin’s futures launched. Futures for BTC were announced in December 2017, which saw Bitcoin price skyrocketed up to $20,000 dollars. However, the price has substantially dropped since then.
Some experts think that this is related to short sellers operating via the futures market. Lee thinks the same could happen here; a pump and then a gradual fall for ETH.
And as investors focus on ETH, BTC shorters may leave that market giving BTC price room to grow.
Lee went on:
“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 n BTC in futures would fall.”
Some individuals do not believe in this theory. Indeed, they are very bullish about ETH futures contracts.
Ethereum has already seen its price fall in 2018—a span that shorters missed out on. Should that market open up—and traders can establish futures contracts on ETH price, the expectation is for more volatility in Ethereum prices. Particularly following big events, upgrades, or announcements, the price may see more action with the additional investments.
Carlos is an international relations’ analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.