Good news came yesterday for US users of Coinbase who want to speculate on Bitcoin and cryptocurrency prices.
After months in which the largest US exchange had threatened to leave the country, yesterday’s news confirms instead that it is more than willing to stay there, and to expand its crypto service offerings aimed precisely at that market.
Coinbase news: Bitcoin futures trading regulated
The news is that U.S. traders can now also trade leveraged regulated crypto futures through Coinbase Financial Markets.
Coinbase Financial Markets (CFM) is the arm of Coinbase that has received NFA approval to be able to offer regulated derivatives products such as crypto futures.
In this regard, in September ago the exchange had created Coinbase Advanced, which is a specific retail trading platform to finally be able to make available to its customers that exchange of regulated perpetual futures contracts.
Coinbase Advanced was initially accessible only to non-U.S. users, whereas now it will be open to them as well.
It should be remembered that the bulk of Coinbase’s customers are from the United States, so it is important that they can offer this service to them as well.
The futures contracts available on Coinbase Advanced are specially sized for retail traders, with denominations of one cent of Bitcoin and one tenth of Ethereum.
These are financial derivatives that offer traders the ability to hedge risk, diversify their portfolios, trade with leverage, and speculate on the direction in which the market is expected to go (either up or down).
Coinbase’s platform
Note that the Coinbase Advanced platform is integrated into the Coinbase exchange, which then allows traders to access both spot and futures markets with one account and one login.
In fact this is something very similar to what happens on other crypto exchanges as well, but this is by no means a given since in this case these are services offered to the U.S. public.
For example, Binance’s international platform does not accept users residing in the US, so much so that a special platform (Binace US) was created for them, but it has had several regulatory problems and is now in disuse.
It must not have been at all easy for Coinbase to get all the necessary permissions to be able to integrate such a service on its exchange, despite the failure of FTX and the partial withdrawal of Binance US from this specific market.
It has now been almost a year since FTX’s crypto futures exchange platform, one of the most widely used in the US, was shut down.
Now, once logged into advanced.coinbase.com, U.S. users will also be able to see the new Futures section in the left-hand menu next to Spot, Wallet, Orders and Other.
In order to trade on coinbase.com/futures, however, one must apply and be enabled after providing some personal information.
All futures contracts on Coinbase Advanced are settled in USD.
Crypto futures
Crypto futures are used by speculators, instead of classic spot trades, in particular for two reasons.
The first, more obvious, is that they allow for leveraged speculation, that is, borrowing funds in order to achieve greater results.
However, since this also implies potential greater losses, its use is recommended only for experienced traders, since losing everything in this way is anything but difficult.
The second, for more experienced traders, is the possibility of betting on both rises and falls.
Thanks to futures, in fact, it is possible both to open long positions, with which one bets on a rise in prices, and yet also short positions, with which one bets on declines.
This is a feature that is totally absent in spot markets, although there are some particular maneuvers that can enable something like this.
However, the combination of leverage and long/short positions constitutes a package that is unmatched in spot markets.
In fact, most speculators prefer to operate in the futures market. Suffice it to say that, for example, in the last 24 hours on Binance’s spot market there were trades of about $12.4 billion, while on the futures markets of the same platform there were up to $58 billion.
Spot markets are primarily used by medium- to long-term investors, while short-term speculators prefer the derivatives market (futures and options).
Source: https://en.cryptonomist.ch/2023/11/02/good-news-coinbase-bitcoin-cryptocurrencies/