Will CME's Ethereum Futures Launch Send Ether Price Higher?

Ether has been in a short-term downward trend ever since the crypto hit its ATH on the weekend and is now trading just above the $1600 support level. With the launch of CME’s Ethereum futures contracts imminent, what can we expect from the Ether price?

Ethereum’s price has been grabbing headlines after Ether hit a new all-time high (ATH) over $1700 and the imminent launch of CME Ethereum futures contracts.

Ethereum, the second-largest cryptocurrency by market value after Bitcoin has seen its native crypto Ether’s price soar by more than 25% this week to record highs above $1,760.

Ethereum Institutional Interest

Ethereum is finding more institutional interest than ever before and on Feb. 8 exchange operator CME group will launch its first Ethereum futures contract on another offering in the crypto market alongside its bitcoin futures and options.

Grayscale Investment has also reopened its Grayscale Ethereum Trust, after having closed the fund to new investors in late December. In this week alone, the trust has seen inflows of nearly 100,000 ETH. Grayscale now manages nearly $5 billion in Ethereum.

JPMorgan Analyst’s estimate that the CME’s Ethereum futures initial volumes are likely to be low. Lead analyst Nikolaos Panigirtzoglou said last week:

"The listing of CME bitcoin futures coincided with all-time highs in bitcoin prices, and researchers at the San Francisco Fed suggested that, by providing a market where bearish positions could be more readily expressed, the listing of these futures contributed to the reversal of bitcoin price dynamics […] In a similar vein, it may be that this week's listing of Ethereum futures contracts will be followed by negative price dynamics by enabling some holders of physical Ethereum to hedge their exposures.”

Ether Price Analysis

Source: ETH/USD TradingView

Ethereum's daily chart shows that Ether's price is currently moving in an upward channel and is currently fluctuating within this channel. There is currently no sign that the Ether price will break through the upper-pressure line—although the recent closing price is above the 9 day Moving Average (MA) however from the perspective of trading volume, it is currently in a low volume area.

The 9 MA has turned into a support line. The chart indicates the  price will test the strength of 9-MA support level. If Ether's price closes below the 9-MA line, it will then move to test the upward channel. The support line is currently in a short-term downtrend. Investors need to pay close attention to whether the daily chart can rebound upward after touching the channel support line.

Source: ETH/USD TradingView

It can be seen from the MACD chart that the golden cross was formed on February 3. The MACD line (green line) and the signal line (yellow line) have formed an opening and gradually decrease in a state of convergence, but from the perspective of transaction volume, the trading volume is decreasing indicating that in the near future, a dead cross may be formed. If the Ethereum price falls below the support line of the upward channel and forms a dead cross with a greater trading volume, there will be a relatively large drop in the Ether price in the short term. 

At the time of writing the Ether price is $1627 according to CoinMarketCap. If Ethereum closes the day below the 9-day MA, we will likely see a drop to $1500 before a rebound back towards the top of the ascending channel. 

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