Coinbase Targets Lucrative Crypto Perpetuals Niche After FTX’s Decline

• Coinbase gains regulatory approval in Bermuda to list perpetual futures for non-US users.
• The crypto giant’s move follows FTX’s fall, once the top crypto futures platform.
• Industry experts believe Coinbase can seize significant market share in this space.

Coinbase ventures into crypto perpetuals, aiming to seize opportunities post FTX’s downfall and challenge Binance’s dominance in the trading volume. An ambitious move that could reshape the crypto futures landscape.

Coinbase’s Perpetual Futures Introduction: A Game Changer?

Recent developments have placed Coinbase at the forefront of the crypto futures space. With its recent announcement of acquiring regulatory approval in Bermuda to introduce perpetual futures for users outside the U.S., the exchange showcases its strategic intent. It’s worth noting that this isn’t the company’s first foray into Bermuda. Earlier in April, Coinbase secured a license to run a spot exchange, a strategic move fueled by challenges from U.S. regulators. The primary goal was always clear – launching a perpetual futures platform.

Understanding the Appeal of Perpetual Futures

Perpetual futures stand out as a unique derivative in the crypto trading realm. These are cash-settled contracts allowing traders to either “long” or “short” an underlying crypto asset using leverage. Unlike typical futures contracts, which expire periodically, perpetual futures have no expiry. Traders pay a funding rate which keeps the pricing in check, bridging the gap between the mark and index price of the involved asset. This mechanism ensures price efficacy and attracts a broad spectrum of traders.

The FTX Collapse: An Opportunity for Coinbase?

The previous year witnessed a significant downturn in the crypto futures market. FTX, the then leader of crypto futures trading, faced a devastating collapse. The aftermath? A drastic reduction in trading volume and liquidity in the crypto sphere. Even now, almost a year post the incident, the market struggles, with a majority of liquidity being pooled across limited exchanges. Binance, another industry giant, has since risen to prominence, leading the market in terms of trading volumes. With Coinbase’s introduction of perpetual futures, they are strategically positioned to challenge this dominance and claim a piece of the lucrative pie.

Binance vs. Coinbase: The Battle of Giants

Currently, Binance holds a significant edge in the crypto trading market. It boasts a trading volume of $6 billion in its spot market, dwarfing Coinbase’s $1.2 billion. On the derivatives front, Binance’s 24-hour trading volume stands at a staggering $32 billion, translating to roughly $9.6 million in daily revenue just from trading fees. With Coinbase’s new venture into perpetual futures, they have set their sights on capturing a share of this vast market. If successful, Coinbase can surpass revenue expectations, continuing its trend of outperformance.

Experts Weigh In

Analysts from the crypto sector are keeping a close eye on these developments. Riyad Carey, an analyst from Kaiko, voiced his perspective, emphasizing that Coinbase is “well positioned” to seize a significant portion of the market share left in the wake of FTX’s decline. This optimistic outlook, shared by many in the industry, paints a promising future for Coinbase’s latest venture.

Conclusion

The cryptocurrency landscape is in constant flux, shaped by innovations, regulations, and market dynamics. Coinbase’s decision to introduce perpetual futures comes at a pivotal time, potentially changing the dynamics of crypto futures trading. With FTX’s void and Binance’s dominance, Coinbase’s move may usher in a new era for the crypto derivatives market. Only time will tell if they succeed in their ambitious endeavor, but for now, all eyes are on Coinbase.