Coinbase, via its subsidiary Coinbase Financial Markets (CFM), has opened up new opportunities for retail crypto traders in the United States by offering regulated crypto futures contracts. This development enables US traders to engage in regulated cryptocurrency futures contracts, with the option to trade in contracts as small as 1/100th of a Bitcoin and 1/10th of an Ethereum.
Futures trading provides traders with numerous advantages, including the ability to hedge risks, diversify their investment portfolios, and make speculative bets on the future direction of the market, regardless of whether it is trending up or down. However, it is crucial for traders to use leverage cautiously, as it has the potential to amplify losses beyond the initial investment.
In August, Coinbase Financial Markets, Inc. received the green light to initiate federally regulated crypto futures trading for qualified US consumers. Consequently, users with access to Coinbase Advanced can now engage in leveraged cryptocurrency futures trading via CFM, with more details available on their official website.
Unique Features and Educational Resources
CFM has introduced nano-sized futures contracts to enhance the trading experience, providing traders with a choice between BTC and ETH futures contracts. These contracts require a smaller initial investment, set at 1/100th of a Bitcoin and 1/10th of an Ethereum, making them an attractive investment option for a wider range of retail investors.
To support traders in making informed decisions, CFM has added a series of educational articles to the Coinbase Learn site. These articles cover various aspects of futures trading, from basic concepts to potential benefits and risks.
Getting Started with Trading
To start trading, traders need to log in at advanced.coinbase.com and navigate to the new “Futures” section in the left menu. From there, they need to apply to trade futures with Coinbase Financial Markets. The application process involves verifying personal information and answering questions about financial background and previous investment experience. Once approved, traders can begin trading futures, with all contracts settled in US dollars.
Looking ahead, CFM plans to integrate futures trading into the Coinbase mobile application, further expanding access to these services.
Coinbase experienced a significant reduction in spot trading volume in Q3 2023 compared to the same period in the previous year, with a reported $76 billion in spot trading volume, marking a 52% decrease according to digital asset data provider CCData. In response, Coinbase has ventured into crypto futures services, a strategic move to counterbalance the downturn in spot trading and tap into emerging market trends.
Despite the decline in spot trading activity, Coinbase managed to increase its market share in the last quarter, benefiting from increased regulatory scrutiny faced by its competitor, Binance.
Ultimately, the introduction of futures trading in the United States marks a pivotal moment in Coinbase’s ongoing effort to democratize access to futures trading for a diverse array of users and boost its spot trading volume.