Can a Cash-Settled Contract Still Have a Large Impact on the Underlying Spot Price?

Yes, absolutely. Even without physical delivery, the trading activity and open interest in cash-settled futures contracts can significantly influence the underlying spot market.

As the contract expiration approaches, traders often adjust their spot positions to align with their futures exposure, a process known as convergence. Furthermore, the price discovery function of a highly liquid futures market can set a benchmark price that spot market participants use for valuation, thus leading to price pressure or movement in the underlying asset.