Coinbase’s new offering to allow smaller investors in the U.S. to trade Bitcoin and Ethereum futures opens up exciting opportunities for everyday individuals to participate in the ever-evolving world of cryptocurrency.
The largest crypto exchange in the U.S., Coinbase, has announced that retail traders can now trade Bitcoin and Ethereum futures on its platform. This move allows smaller investors to access these financial products through Coinbase Advanced, a platform that offers more complex crypto trading options. Compared to derivatives exchange CME, Coinbase’s offering is aimed at traders with smaller budgets.
In a blog post, Coinbase stated that these futures contracts have lower upfront capital requirements, making them a more affordable investment option for a broader range of retail customers. This announcement comes as Coinbase looks to diversify its products and compete with Binance, the world’s largest cryptocurrency exchange.
Futures contracts not only allow traders to speculate on the future price of an asset but also enable them to trade more assets than they actually own. By using collateral, traders can magnify their losses and gains based on the price fluctuations of cryptocurrencies.
Crypto derivatives markets, including futures, have a significantly higher trading volume than spot markets, where cryptocurrencies are simply bought or sold. Binance dominates the crypto derivatives market, with a trading volume much larger than its closest competitors. Coinbase’s recent product announcements indicate its desire to gain a share of this market.
Coinbase has been more willing than Binance to comply with regulations and avoid risky crypto financial instruments. In April, the exchange obtained a regulatory license in Bermuda and subsequently launched a Bermuda-based offshore exchange specializing in futures. In late September, it opened up this offshore exchange to retail investors. However, Coinbase’s most recent unveiling of crypto futures is in the U.S., where it obtained a license earlier this year.
This move by Coinbase reflects its ambition to expand its product offerings and compete with other major exchanges in the crypto derivatives market. By providing futures contracts to retail investors, Coinbase aims to attract a wider range of customers and capture a portion of the growing trading volume in this market.