Expert On How XRP Price Could React After CME Futures Launch

The Chicago Mercantile Exchange (CME) is launching XRP futures today, May 19. This development represents a major step for XRP’s market maturity and has attracted attention from institutional and retail investors alike. Trader and XRP analyst Aj Allen offered insights on how this event could influence short-term price action, drawing from historical data and professional trading behavior. XRP Futures Explained: Institutional Appeal and Trading Mechanics CME’s XRP futures are cash-settled, meaning the contracts are resolved in fiat currency rather than actual asset delivery. This format enables market participants to speculate on XRP’s price without holding it. It also appeals to institutions that seek exposure to digital assets without dealing with custody or regulatory complexities. Traders can take long positions if they expect prices to increase or short positions if they predict a decline. While retail investors may focus on directional trades, institutional players tend to apply advanced strategies, including arbitrage and hedging. How Much Could XRP React to This Launch? Allen referenced previous Futures rollouts as case studies. When CME introduced Bitcoin futures in December 2017, Bitcoin surged to a record high near $20,000. However, the price dropped roughly 30% within days, which coincided with the broader market peaking during that bull cycle. Similarly, when Ethereum futures began trading on the CBOE in February 2018, ETH dropped from approximately $1,400 to $1,100 shortly after. These examples suggest that futures launches, while often preceded by bullish speculation, may be followed by sharp declines as traders take profits or enter short positions. XRP holders should also prepare for something similar. Institutional Strategies and Market Volatility Allen explained that professional traders frequently use basis trading to capitalize on the difference between futures and spot prices. When futures trade at a premium to the spot price (a condition known as contango), investors may short futures and purchase the underlying asset. In contrast, if futures trade below the spot price (backwardation), they may buy futures and short the spot market. These actions help align prices but can also contribute to short-term volatility. Furthermore, futures contracts serve as risk management tools. Investors holding XRP may use futures to hedge their positions, especially during market uncertainty, by taking offsetting positions that reduce potential losses. We are on twitter, follow us to connect with us :- @TimesTabloid1 — TimesTabloid (@TimesTabloid1) July 15, 2023 Anticipation surrounding the Futures launch has led to expectations of a potential price increase. However, based on previous market behaviour observed with Bitcoin and Ethereum, a corrective phase could follow the initial uptick. Allen notes that the impact will ultimately depend on institutional engagement, trading volume, and market liquidity. At the time of writing, XRP is trading at $2.31, reflecting a 3.10% decrease in the past 24 hours. The token remains approximately 40% below its historical peak, indicating room for both upward movement and further volatility. Potential Long-Term Implications Beyond immediate price considerations, the launch of XRP futures may improve the asset’s prospects for a spot exchange-traded fund (ETF). Analysts from Bloomberg have previously indicated that having a CFTC-regulated futures product in place is a key factor the SEC evaluates when approving spot ETFs. This was the case with Bitcoin and Ethereum, which had regulated futures markets before receiving approval for spot ETFs in 2024. As the market adapts to this new derivative offering, observers will watch closely to see whether XRP follows a pattern similar to its predecessors and how this development might shape its role in the digital asset space. Disclaimer : This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses. Follow us on X , Facebook , Telegram , and Google News The post Expert On How XRP Price Could React After CME Futures Launch appeared first on Times Tabloid .

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