- Coinbase is enabling speculation on cryptocurrencies that haven’t yet entered the market for both institutional and individual investors.
- The new feature allows trading via perpetual futures contracts for cryptocurrencies not available in spot markets on Coinbase’s international platform.
- “Coinbase’s pre-launch markets will enable users to explore the prices of upcoming projects on a secure and reliable platform,” stated Coinbase.
Coinbase’s latest feature lets investors speculate on the future prices of cryptocurrencies before they enter the spot market, offering potential high returns but with significant risk.
Coinbase Unveils Pre-Launch Futures Trading
Recently, Coinbase announced a groundbreaking feature enabling users to speculate on the prices of cryptocurrencies prior to their market entry. This new offering, available on Coinbase International and Coinbase Advanced platforms, excludes users from the United States, United Kingdom, and Canada due to regional regulations.
Unique Characteristics of Pre-Launch Perpetual Contracts
Unlike regular perpetual futures contracts, the pre-launch perpetual contracts will utilize a unique “Pre-Launch Index Price,” which is calculated using a 4-hour exponential moving average (EMA) of the token’s indicative price. This approach differentiates it from the usual perpetual contracts traded on Coinbase, offering a distinct trading experience tailored to speculative activities on upcoming tokens.
Benefits and Risks of Trading Pre-Launch Perpetual Contracts
Trading pre-launch perpetual contracts offers investors an opportunity to speculate on new tokens’ future prices, potentially increasing their returns prior to market availability. These contracts, however, come with increased volatility, reduced liquidity, and higher liquidation risks compared to standard perpetual futures. Coinbase aims to mitigate some of these risks by limiting the leverage to a maximum of 2x, in contrast to the 10x leverage available on regular contracts.
Geographical Limitations and Access to the New Feature
While the feature is innovative, its access is geographically restricted. Institutional clients who meet specific criteria can use the Coinbase International Exchange, while individual investors can trade through the Coinbase Advanced platform. This new feature’s availability is limited to users outside the United States, United Kingdom, and Canada, adhering to the regulatory landscapes of these regions.
Conclusion
Coinbase’s introduction of pre-launch perpetual futures contracts marks a significant step in cryptocurrency trading by providing new avenues for speculation. This innovative feature allows traders to explore potential price movements of future tokens, albeit with a heightened risk profile. As the cryptocurrency market continues to evolve, such advances offer both opportunities and challenges, demanding a keen understanding of market dynamics and regulatory considerations.
