CME Trades 100K Contracts of Micro Ether Futures in First Two Weeks

Micro ether futures contracts introduced on the Chicago Mercantile Exchange (CME) earlier this month are off to a slower start than the bitcoin equivalents that began trading in May. Derivatives giant CME launched the ether versions on Dec. 6, opening the door for traders of all sizes to hedge their exposure in the native token of Ethereum’s blockchain.

The new offering has seen 115,000 contracts change hands in the two weeks to Dec. 17, the exchange told CoinDesk in an email.

“Participation in our micro ether futures contract has grown rapidly since its launch two weeks ago, and we are encouraged by the strong customer adoption and support thus far,” CME Group’s Tim McCourt, global head of Equity Index and Alternative Investment Products, said in a press release. “At 1/500th the size or our larger ether futures, this new, smaller contract allows traders of all sizes to better manage their ether price risk in an efficient, cost-effective way.”

Still, the response to micro ETH futures appears tepid compared with the early action in micro bitcoin futures listed on May 3. Those registered a trading volume of 224,151 contracts in the first two weeks, according to data provided by the exchange.

Both micro contracts are sized 1/10th of one BTC and one ETH, while standard contracts represent five BTC and 50 ETH and are widely considered a proxy for institutional participation.

Micro ETH futures’ slow start isn’t surprising, however, given the current dour market mood. Further, volumes usually dip ahead of the year-end holidays. When micro BTC contracts went live in early May, market sentiment was quite bullish, with bitcoin trading around $60,000.

Activity in micro ETH futures may pick up in coming months as focus shifts to Ethereum’s impending upgrade to the proof-of-stake mechanism, dubbed ETH 2.0, and ether gains notoriety as a deflationary asset.

“Ethereum net issuance continues to decline with only ~37K ETH issued in November,” Messari analyst Mason Nystrom said in a research note published on Dec. 7. “At this rate, if market demand continues, Ethereum may see its issuance become deflationary relatively soon. In fact, it’s possible that December might become the first month in which Ethereum experiences negative net issuance (deflation).”

Ethereum implemented the EIP-1559 upgrade on Aug. 5, introducing a mechanism to burn a portion of fees paid to miners.

CORRECTION (Dec. 22, 16:31 UTC): A previous version of this article said standard futures contracts represent one ETH and one BTC.