The United States Securities and Exchange Commission has determined that the cryptocurrency known as Ethereum does not meet the definition of an investment security, thereby clearing the way for the Chicago Board Options Exchange as well as the Chicago Mercantile Exchange to develop ETH futures contracts.
ETH futures contracts have the potential of attracting greater investor attention to this cryptocurrency, which is considered by many to be superior to Bitcoin in terms of blockchain technology, and to increase its mainstream appeal. It should be noted, however, that the debut of futures contracts on Ethereum will likely result in an initial loss of value for this crypto coin; this was already experienced by Bitcoin in 2018, and it can be explained by the sudden rush of traders who take short positions on the market. At the same time, recent Bitcoin futures activity suggests that more commodities traders are starting to go long because they sense a rally happening later this year.
With regard to mining, analysts expect to see Ethereum switching to a software platform in an effort to avoid the controversial mining cartels and inequality that currently surround Bitcoin. On the subject of real-world application and circulation, the ETH blockchain has experienced greater acceptance, case in point: the central banks of Russia and Singapore have adopted the Ethereum distributed ledger to create digital versions of their national currencies.
Once Bitcoin starts getting closer to its mining limit, a milestone that could happen later this year, cryptocurrency investors may start looking for alternatives, and Ethereum is one of the most likely candidates. For the time being, ETH will continue to be closely tied to the volatility caused by Bitcoin’s wild market gyrations, and this can be expected of the top 15 cryptocurrencies in terms of market capitalization.