The two largest cryptocurrencies by market capitalization, Ethereum and Bitcoin, slowed down on their rally. Following a surge above critical resistance, the cryptocurrencies could retrace and return to critical support levels.
As of this writing, Ethereum (ETH) trades at $1,840 with sideways movement in the last 24 hours. Over the past week, ETH has recorded a 2% loss except for Bitcoin (BTC) and Solana (SOL), the crypto top 10 by market cap trades in the red.
Trouble Ahead For Ethereum?
Earlier today, the Chicago Mercantile Exchange (CME) announced the launch of a new product. The platform will roll out an Ethereum (ETH/USD) to Bitcoin (BTC/USD) ratio futures contract.
The financial product will follow the price of these cryptocurrencies and their correlation. In that way, traders can gain exposure to both cryptocurrencies by holding a single futures contract.
According to an official announcement, The product aims to create more opportunities for traders in the nascent industry. However, in the short term, the CME launch hints at a potential downside for the two largest assets in the crypto market.CME Product Could Trigger This Effect
In the past, whenever the CME rolled out a Bitcoin or Ethereum-based contract, the price of either asset trended to the downside. A pseudonym analyst forecasted issues for ETH and BTC, probably driven by a “buy the rumor, sell the news” effect.
Via Twitter, the analyst stated, reacting to the news:
If this has an effect similar to the $BTC & $ETH futures back in the day then the release of this instrument could form a pivot for the ETH/BTC pair. Maybe more down into the release and then a reversal around the end of July? Let’s see.
In response to the forecast, another analyst stated that a “buy the rumor, sell the news effect” will cause ETH’s price to rally into the event. Therefore, ETH could profit as the CME prepares to roll out their new contracts and anticipation around the spot Bitcoin Exchange Traded Funds (ETFs) applications continues.
The analyst stated:
Wouldn’t make more sense a buy the rumor, sell the news event? So we pump before end of July Everything is exhausted right now. If BTC pumps through resistance, maybe ETH could catch up.
Cover image from Unsplash, chart from Tradingview