Good news arrived yesterday for Coinbase customers in the United States who wish to speculate on Bitcoin and cryptocurrency markets.
After months of threatening to leave the country, the largest US exchange confirmed yesterday that it is more than willing to stay and develop its crypto service offers focused specifically at that market.
Bitcoin Futures Trading Is Now Regulated, According To Coinbase
The good news is that Coinbase Financial Markets now allows US traders to trade leveraged regulated crypto futures.
Coinbase Financial Markets (CFM) is Coinbase’s subsidiary that has gained NFA approval to provide regulated derivatives products such as cryptocurrency futures.
In this regard, the exchange launched Coinbase Advanced in September, which is a specialized retail trading platform that allows the exchange to finally provide its users the exchange of regulated perpetual futures contracts.
Coinbase Advanced was previously exclusively available to non-US users, but it will now be available to them as well.
It should be noted that the majority of Coinbase’s customers are from the United States, so it is critical that they can also provide this service to them.
Coinbase Advanced’s futures contracts are designed specifically for retail traders, with denominations of one penny of Bitcoin and one tenth of Ethereum.
These are financial derivatives that allow traders to hedge risk, diversify their portfolios, trade with leverage, and bet on the market’s predicted direction (up or down).
The Coinbase Platform
It is worth noting that the Coinbase Advanced platform is integrated into the Coinbase exchange, allowing traders to access both spot and futures markets with a single account and login.
In fact, this is fairly similar to what happens on other crypto exchanges, although this is by no means a given given that these are services marketed to the general public in the United States.
For example, Binance’s international platform does not accept users from the United States, prompting the creation of a separate platform (Binance US), which has since been decommissioned due to regulatory issues.
Despite the collapse of FTX and the partial withdrawal of Binance US from this specific market, it must not have been easy for Coinbase to obtain all of the necessary approvals to include such a service on its exchange.
It’s been about a year since FTX’s crypto futures exchange platform, one of the most popular in the United States, was shut down.
When logging in to advanced.coinbase.com, US customers will now notice the new Futures area in the left-hand menu, among Spot, Wallet, Orders, and Other.
To trade on coinbase.com/futures, one must first apply and be approved after supplying certain personal information.
On Coinbase Advanced, all futures contracts are settled in USD.
Speculators prefer cryptocurrency futures to traditional spot trades for two reasons. The first and most obvious benefit is that they enable leveraged speculating, or borrowing cash to get larger returns.
However, because this also entails the possibility of bigger losses, it is only recommended for experienced traders, as losing everything in this manner is anything but tough.
The second option is for more experienced traders to bet on both increases and declines.
Because of futures, it is possible to open both long positions, which bet on price increases, and short positions, which gamble on price drops. This is a capability that is completely lacking in spot markets, while there are some specific moves that can enable something similar.
However, the combination of leverage and long/short positions creates an unrivaled package in spot markets.
In fact, the majority of speculators prefer to trade in the futures market. Suffice it to say that in the last 24 hours, there were around $12.4 billion in deals on Binance’s spot market, and up to $58 billion on the same platform’s futures markets.
Medium- to long-term investors prefer spot markets, whereas short-term speculators prefer the derivatives market (futures and options).