The Chicago Mercantile Exchange (CME) Group, a globally recognized derivatives exchange, announced it will launch Solana (SOL) futures contracts on March 17, pending a review by United States financial regulators.
According to the Feb. 28 announcement, market participants will have access to micro contracts of 25 SOL or standard contract sizes of 500 SOL, and all contracts will be cash-settled.
CME Group already provides futures and options contracts for Bitcoin (BTC) and Ether (ETH) to investors looking to hedge against the highly volatile nature of these digital assets.
The addition of Solana futures contracts gives traditional finance investors additional exposure to the crypto markets and provides the crypto markets with fresh capital injections that should support prices.
CME open interest on derivatives contracts quarter-by-quarter 2024. Source: CME Group
Related: CME Group reports record crypto volumes for Q4
Solana’s price responds to CME futures announcement
Following the announcement of futures products in March, SOL’s price surged by approximately 17% from around $125 to roughly $146 on Feb. 28.
Despite this, SOL has been on a clear downtrend in February, with prices dropping by roughly 46% since the start of the month from around $233 to present levels.
SOL is currently trading well below its 200-day exponential moving average (EMA), which is a dynamic and critical level of support.
The relative strength index (RSI) is at 33 and puts SOL on the edge of oversold territory — indicating a potential price bottom.
Current Solana price action. Source: TradingView
Crypto markets need fresh capital to resume rally
Liquidity is to financial markets what oxygen is to a diver, and the lack of fresh capital injections has stalled the crypto rally that kicked off following the reelection of President Donald Trump in the United States.
Typically, this liquidity drives the price of Bitcoin, which, in turn, flows into large-cap altcoins and then smaller-cap altcoins as investors rotate their capital up the risk curve.
According to Master Ventures founder Kyle Chassé, Bitcoin prices are collapsing because hedge funds and institutional investors looking to profit from the difference between spot BTC prices and futures prices are being squeezed out of that trade as the price difference narrows.
Bitcoin needs new, organic buyers who believe in the asset for the uptrend to resume, as opposed to institutional buyers chasing yield, Chassé added.
Unfortunately, this BTC correction may extend into April due to macroeconomic factors, a recent research report from Matrixport found.
Magazine: What Solana’s critics get right… and what they get wrong
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