Coinbase has paved the way for retail crypto traders in the United States by introducing regulated crypto futures contracts through its subsidiary Coinbase Financial Markets. This means that U.S. traders now have the opportunity to delve into regulated crypto futures contracts. These contracts, tailored for retail traders, are available at 1/100th of a Bitcoin and 1/10th of an Ethereum.
Futures trading provides traders with numerous advantages. They can hedge risks, diversify their portfolios, and make speculative decisions on the market’s direction, whether expecting it to rise or fall. However, traders need to approach leverage with caution. The potential losses from using leverage can surpass the initial investment.
This development comes after Coinbase Financial Markets, Inc. secured approval in August to introduce federally regulated crypto futures trading for eligible US clients. As a result, Coinbase Advanced users can now engage in leveraged crypto futures trading via CFM. More details are available on their official website.
Innovative features and educational resources
To enhance the trading experience, CFM presents nano-sized futures contracts. Traders can access two distinct futures contracts: BTC and ETH. With sizes set at 1/100th of a Bitcoin and 1/10th of an Ethereum, these contracts demand lower initial capital. This makes them an appealing investment choice for a broader spectrum of retail investors.
Additionally, to ensure traders are well-informed, CFM has enriched the Coinbase Learn platform with a collection of articles. These articles elucidate various facets of futures trading, ranging from fundamental concepts to the advantages and inherent risks.
How to commence trading
To participate in this new update, traders should first head to advanced.coinbase.com and log in. A new “Futures” segment has been added to the left menu. After logging in, traders must apply to trade futures with Coinbase Financial Markets. Due to financial regulations, it’s imperative to verify personal details and answer some questions about financial history and prior investment experiences. Once the application is approved, traders can initiate their futures trading. All the futures contracts will be settled in USD.
Moreover, while currently accessible only via the web, CFM has plans in the pipeline to integrate futures trading into the Coinbase mobile application.
Coinbase experienced a significant decline in spot trading volume during Q3 2023 compared to the same period in 2022. According to an analysis by digital asset data provider CCData, Coinbase recorded around $76 billion in spot trading volume, which is a 52% decline. To counter this decline, Coinbase decided to launch crypto futures services, which seems like a natural progression.
Despite the decline in spot trading volume, Coinbase was able to gain more market share in the last quarter. This was due to the increased regulatory scrutiny faced by its competitor crypto exchange, Binance.
Nonetheless, the move to introduce futures trading in the US marks a pivotal moment in Coinbase’s journey to democratize access to futures for an expansive range of traders and to boost its spot trading volume.
