The massive cryptocurrency exchange Coinbase revealed on Monday that it will list two important altcoins on futures.
The official announcement that Coinbase “will add support for Solana (SOL) and Avalanche (AVAX) perpetual futures contracts” was made on Twitter via X. The exchange is going to introduce Coinbase International Exchange and Coinbase Advanced futures support.
The announcement states that subject to liquidity conditions, the SOL-PERP and AVAX-PERP markets will launch on November 14…
@CoinbaseIntExch will add support for Solana and Avalanche perpetual futures contracts on Coinbase International Exchange & Coinbase Advanced. The opening of our SOL-PERP and AVAX-PERP markets will begin on or around 4pm UTC on 14 November 2023, if liquidity conditions are met. pic.twitter.com/D2QTV9k9Qe
— Coinbase International Exchange 🛡️ (@CoinbaseIntExch) November 12, 2023
One kind of derivative contract that enables traders to speculate on the underlying asset price movements indefinitely is the perpetual futures. They provide arbitrage, leverage, and hedging opportunities, among other benefits, to traders. However, there are drawbacks as well, such as volatility, liquidation, and excessive leverage.
For users in qualified non-US jurisdictions, Coinbase Advanced introduced perpetual futures trading in October. Four perpetual contracts were initially announced: Litecoin (LTC), Ethereum (ETH), Ripple (XRP), and Bitcoin (BTC).
Additionally, the contracts offer up to 5X leverage, while Ripple only offers up to 3X leverage. The stablecoin USD Coin (USDC) is used to settle all perpetual futures agreements.
“On our Advanced Trading platform, perpetual futures trading is restricted to users only as a result of Coinbase adhering to local regulations regarding cryptocurrency derivatives.” in particular non-US areas,” the exchange observes.
The Bermuda Monetary Authority gave Coinbase International Exchange regulatory clearance in September to start providing perpetual futures to non-US clients.
Need for Cryptocurrency Indefinite Futures
Demand has increased as perpetual futures in the cryptocurrency markets have emerged as one of the most well-liked derivatives contracts in recent times.
Data from Laevitas indicates that the global centralized exchange (CEX) perpetual volume was $195.3 billion as of November 10. Competitor Binance to Coinbase took the lead in volume, with OKX exchange coming in second.
According to Bloomberg, Conor Ryder, a research analyst at Kaiko, the ratio of Bitcoin perpetual to spot volumes is at its highest point in almost two years. In industry parlance, perps are those that “don’t expire and have been hugely popular with traders,” he continued.
In 2016, BitMEX, a cryptocurrency exchange, first made the perpetual contract available. Because of the product’s ease of use, retail traders were initially drawn to it. Several exchanges then adopted BitMEX’s perpetual contracts.