As a way of expanding its revenue and preparing for the future, COINBASE Global inc. will roll out its first crypto derivative product on June 27. According to the statement, this derivative product is a nano bitcoin futures contract (BIT). The report added that each BIT is 1/100th of one BTC. Clearing firms such as ABN, Wedbush, and Ambro are among its expected clients.
More Details About Coinbase’s Derivative Product
Anyone interested in the product can purchase them from third-party retail brokers like Optimus Futures and Ninjatrader. Coinbase is launching a derivative product despite recently announcing that it would lay off 18% of its workforce a few weeks ago.
The leading US crypto exchange cited the crypto market winter as its reason for reducing its staff strength. Many industry watchers speculate that Coinbase would soon launch a crypto derivative product after its FairX acquisition.
FairX is a designated contract markets (DCM) exchange with its regulation under the CFTC. According to the announcement, Coinbase is attracted to the crypto derivatives market as the trade volume of the market keeps growing rapidly. The total trade volume of the crypto derivatives market is nearly $3tr.
Hence, the exchange believes adding a derivative product to its product portfolio is the next growth step for the company. More importantly, it would enable it to offer a product that has been in massive demand in the crypto market space. Following this launch,
Coinbase would rank among the few crypto companies with a crypto derivative product in the US. The US crypto derivatives space has few operators because of tight market regulations. Hence, many top crypto firms have derivative products in other regions apart from the US.
Coinbase Is Preparing For Its Future Growth
Cooinbase’s product portfolio has lacked futures and options products for many years. However, due to current market conditions, the famous US exchange might be rolling out its first crypto derivative product. The crypto winter has caused a massive reduction in spot trading volumes since January 2022.
Consequently, Coinbase’s revenue has dropped significantly. Notably, over 50% of Coinbase’s income comes from spot trading. Prices of digital assets (including bitcoin) have plunged sharply in the last few weeks.
The leading cause of the decline has been the liquidity issues suffered by leading crypto lending firms and hedge funds. Liquidity issues at Three Arrows Capital and Celsius network have been the most pronounced.
Coinmarketcap data shows that BTC’s price has been down 30% since last month. In addition, a recent Bloomberg data claims that Coinbase shares have declined by 77% since January 2022. One of Coinbase’s top-level executives, Boris Illyevsky, shared his excitement concerning the launch.
He stated that the exchange’s crypto derivative launch allows lots of investors to invest in the tightly regulated futures market. Part of the announcement says that the Coinbase derivatives product launch will take place on the Coinbase derivatives exchange (formerly known as FairX). This exchange is now a subsidiary of Coinbase Global Inc.
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