In June, Coinbase debuted its micro-bitcoin futures product.
The 1/100th-of-a-bitcoin cash-settled futures contract trades on several retail brokers, including Wedbush, EdgeClear, and NinjaTrader.
The head of Coinbase Derivatives Exchange, Boris Ilyesky, noted at the time of the product’s launch that it “needs less upfront cash than traditional futures products and presents real potential for a significant increase in customer involvement in US-regulated cryptocurrency futures markets.
Spot trade volumes on Coinbase have decreased dramatically, falling from $200 billion in May 2021 to $59 billion in July. Though its “nano” bitcoin future’s product, which saw volumes reach records three days in a row in the previous week, is seeing a rush of new retail traders.
After many days of growth, notional volumes for nano futures reached 217,045 on July 19; however, according to data from Bloomberg, contract volumes fell to 117,493 on July 22. For most of June and July, volumes were below 50,000 contracts traded per day.
The company has experienced a “spike in activity since retail broker partners started marketing/promotional activities last week,” according to an email from Coinbase’s sales team. After purchasing FairX, a derivatives marketplace controlled by the Commodity Futures Trading Commission, Coinbase entered the cryptocurrency futures market this year.
With companies like FTX and CME Group trading bitcoin futures for tens of billions of dollars each month, it faces strong competition.
Launch of FairX
The Coinbase Derivatives Exchange originally known as FairX and acquired by Coinbase in January of this year will launch its first listed cryptocurrency derivatives product.
According to a blog post written on Friday, the so-called “Nano” Bitcoin futures contract will begin trading on June 27 under the ticker BIT. Each contract will have a size equivalent to one-tenth of a Bitcoin and be settled in cash, or more specifically, U.S. dollars.
It’s interesting to note that the BIT contracts will initially only be traded through independent brokers and clearing companies.
For the purpose of directly providing margined futures contracts to its clients and consumers, Coinbase is now waiting for the Commodity Futures and Exchange Commission to approve the licence for its own futures commission merchant (FCM).
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