The market for digital currencies has recently grown increasingly complex. A major participant in the cryptocurrency market, Coinbase is upping its game and entering the market for perpetual futures trading on a worldwide scale outside of the US.
With this risky move, the business hopes to take advantage of derivatives’ potential and profit from the booming demand that has swept the cryptocurrency market.
The Next Big Play
With the debut of its new service, Coinbase Advanced allows traders from particular non-U.S. jurisdictions to engage in perpetual futures trading.
The USDC currency may be used by enthusiastic investors to stake their money on contracts involving the four cryptocurrencies bitcoin, ether, litecoin, and XRP. The XRP is an anomaly, offering a maximum of 3X leverage, although the majority of contracts on the platform provide up to 5X leverage.
This trading strategy is still linked to the Coinbase Advanced website for the time being. The days until Coinbase introduces a mobile trading option, which would make the platform even more accessible to tech-savvy traders globally, are, however, reportedly numbered, according to rumors from within.
The Allure of Derivatives
The choice to launch this service wasn’t made on the spur of the moment. It was a premeditated action planned after Coinbase International Exchange received the Bermuda Monetary Authority’s seal of approval.
They were given the freedom to provide eternal futures to their large international customer thanks to this license. Analyzing the data would allow one to rapidly see the enormous influence derivatives have on the cryptocurrency ecosystem.
A startling picture is painted by figures from March 2023, which show that approximately three-quarters of the $2.95 trillion in total cryptocurrency trading volume is made up of derivatives.
To put things in perspective, just a few days earlier, on October 16, the volume of perpetuals traded on the world’s largest market surged to a staggering $151 billion.
It’s important to note that Binance, Coinbase’s sworn enemy, took the lion’s share of this volume, taking home almost $96.3 billion, or an impressive 63.7% of the total.
OKX, holding onto a healthy 16% of this market, was following closely but was still far behind. This attempt was highlighted in a blog post by Coinbase, underlining the enormous demand for these perpetual futures contracts.
The greater capital efficiency that margin trading offers was noted in the blog. The opportunity to access the cryptocurrency market without a sizable initial commitment makes it alluring.
Additionally, the flexibility of trading both long and short positions gives traders the chance to shrewdly manage the risks related to their primary crypto assets.
The most recent move made by Coinbase in the international game of crypto chess is evidence of its aspirations. However, the success of this undertaking will only be determined with time.
Companies like Coinbase must be flexible as the crypto industry continues to develop, adapt, and occasionally convulse, navigating these rough seas with measured risks, insight, and a dash of chutzpah.
Even while this specific endeavor appears promising, one can only guess at how it will ultimately turn out in the always changing world of cryptocurrencies.
