In the midst of a collapse in the market for digital assets, cryptocurrency exchange Coinbase is launching a derivatives product next week. On June 27, Nano bitcoin futures, the exchange’s first listed product, will go live. Investors will be able to purchase contracts linked to the potential value of a tenth of a bitcoin. It will be reachable through clearing companies and independent retail brokers.
Futures contracts can be used as a hedge for trading techniques by institutional and retail traders alike because they are smaller in size and need less upfront cash than regular bitcoin futures products.
According to the statement, “it presents a real prospect for considerable expansion of retail participation in US regulated crypto futures markets and requires less upfront capital than typical futures products at 1/100th of the size of a Bitcoin.”
Derivatives are not universally seen as a product that retail traders should use, nevertheless. A senior Dutch financial regulator recently said that trading in crypto derivatives should be limited to wholesale markets exclusively due to the possibility of manipulation and other illegal conduct.
The price of bitcoin has been fluctuating recently around the psychologically significant level of $20,000 after last week’s decline to its lowest level since 2020. This year, the value of the oldest and largest cryptocurrency has decreased by nearly 55%. After reaching its peak in November at $3 trillion, the market value of all cryptocurrencies is presently less than $1 trillion. Due to uncertainties over income and cash flow following the recent crypto meltdown, Moody’s downgraded Coinbase’s (ticker: COIN) corporate debt on Thursday and put it under review. Senior Guaranteed Notes due in 2028 and 2031 totaled $2 billion for the corporation.
The institutions linked to digital assets have been harmed by their collapse. Withdrawals and other transactions were stopped by lender Celsius Networks last week. According to hedge fund Three Arrows Capital, which reported significant losses, a bailout or asset sales were being considered. To be able to directly sell products to investors, Coinbase Financial Markets must still obtain regulatory clearance to operate as a futures commission merchant.
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