Tom Lee has been friends of cryptocurrencies and is often quoted speaking positivize about any news that hits the crypto street. In one of the rare occasions, Tom Lee doesn’t seem to be pleased with the news of CBOE announcing Ethereum futures as he believes this move could bring down ETH price in spot markets.
Speculators could play foul to weigh down prices of Ethereum
Tom Lee, who currently is the head of research at Fundstrat Global Advisors, in his interview to Business Insider said that Ethereum futures will allow speculators to hold bearish positions for the ETH and thus make it easier for them to bring down its price in the spot markets.
This claim, by Tom Lee, seems to have come from the experience that the crypto street saw from the introduction of BTC futures. Since Bitcoin futures debuted on CBOE in mid-December of last year, prices of Bitcoin in the spot market have tanked, from briefly touching $20,000 before tumbling to $6000 and now slowly recovering to $7,200 as it stands today. While many still believe it was a mere coincidence, technically short sellers did find refuge in holding positions against Bitcoin via the futures market, bringing the prices down.
Even though Tom Lee is negative on Ethereum futures, he believes that the new entrant could gain all the short-term attention of speculators and investors, bringing relief to BTC futures by alleviating pressure on bitcoin shorts This in all probability could help the prices of BTC to rise.
To quote Tom Lee as he spoke to reports of Business Insider on the topic
“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,” Lee said. “They can now short Ethereum, means the net short on BTC in futures would fall.”
Also, read: Ethereum Readies Ammunition to Take its Price to New Highs
It was reported a couple of days back that the Chicago Board Options Exchange (CBOE) is pretty close to start the trading of futures for Ethereum (ETH) on its platform. According to undisclosed sources which were quoted by Business Insider, the Ethereum futures could start trading as early as the end of 2018. CBOE would be basing its ETH futures on Gemini’s underlying market, people familiar with the situation said. This would be similar to CBOE step which it took for bitcoin futures keeping New York-based crypto exchange run by the Winklevoss twins as the underlying market
Although CBOE is ready for the launch, it still awaits the Commodities Futures Trading Commission to get comfortable with the product and give its go ahead, before its official launch
This news did bring some smiles on the street as Danny Kim, head of growth at SFOX was quoted saying
“CBOE’s offering will enable crypto traders to take both long and short positions in Ethereum, and it’s another step forward to a new accepted asset class,” “With this, I think the new investment opportunity will take crypto out of the bearish market and reverse to a new bull.”
Definitely, as Tom Lee puts, Ethereum Futures could bring down prices for ETH in short term but is definitely a good step for the long term. A derivative market presence would definitely help the cryptocurrency to mature and may also open doors to institutional monies. You never know we might see an ETH based ETF application soon at the doors of SEC.
Is Ethereum Future positive for Ethereum or will it also have a similar impact that BTC futures had on BTC? Do let us know your views on the same.
The post Bitcoin Bull Tom Lee Believes ETH Futures not be Beneficial for ETH Price appeared first on Coingape.
Written by Nilesh Maurya @ https://coingape.com/tom-lee-eth-futures-not-beneficial-for-eth-price/ September 3, 2018 Nilesh Maurya