The digital currency marketplace just got a bit more intricate. Coinbase, a significant player in the crypto world, is stepping its game up, venturing into the realm of perpetual futures trading on a global scale, excluding the United States.
With this bold move, the company aims to leverage the power of derivatives, capturing a slice of the growing demand that has taken the crypto industry by storm.
Perpetual Futures: The Next Big Play
Coinbase Advanced has launched its new service, enabling traders from specific jurisdictions outside the U.S. to dive into perpetual futures trading.
Here’s the lowdown: eager investors can employ the USDC coin to place their stakes on contracts across four cryptocurrencies, namely bitcoin, ether, litecoin, and XRP. While most contracts on the platform provide up to 5X leverage, the XRP is an exception, allowing a maximum of 3X leverage.
For now, this trading model remains tethered to the Coinbase Advanced webpage. However, whispers from the inside suggest that the days are numbered before Coinbase unveils a mobile trading feature, making the platform even more accessible to tech-savvy traders worldwide.
The Bigger Picture: The Allure of Derivatives
The initiation of this service wasn’t just a spur-of-the-moment decision. It was a calculated move, mapped out in the wake of Coinbase International Exchange obtaining a nod of approval from the Bermuda Monetary Authority.
This authorization granted them the latitude to provide perpetual futures to their expansive clientele outside the American borders. If one were to scrutinize the data, they’d quickly discern the colossal impact derivatives have on the crypto ecosystem.
March 2023 statistics paint a staggering picture, revealing that derivatives account for nearly three-quarters of the entire cryptocurrency’s trading volume, which floats around a whopping $2.95 trillion, as per a CoinGecko survey.
To throw in more figures for perspective, just a couple of days ago, on October 16, the global centralized exchange perpetuals volume skyrocketed to an eye-watering $151 billion.
It’s worth noting that Coinbase’s arch-nemesis, Binance, hogged a lion’s share of this volume, seizing roughly $96.3 billion, which translates to an enviable 63.7% of the pie.
Following closely, though still a considerable distance behind, was OKX, clutching onto a respectable 16% of this market. Coinbase’s blog post shed light on this endeavor, underscoring the immense demand for these perpetual futures products.
The blog mentioned the increased capital efficiency that trading on margin offers. It’s a tempting prospect, allowing traders to tap into the crypto market without a hefty initial investment.
Moreover, the duality of going long and short grants traders the luxury to judiciously manage risks associated with their core crypto assets.
Coinbase’s latest maneuver in the global crypto chess game is a testament to its ambitions. However, only time will dictate the fruitfulness of this endeavor.
As the crypto market continues to mature, evolve, and occasionally convulse, companies like Coinbase must remain agile, navigating these choppy waters with calculated risks, foresight, and a touch of audacity.
And while this particular initiative looks promising, one can only speculate on its eventual outcome in the dynamic world of cryptocurrency.