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Coinbase Releases First Crypto Derivative Despite Declines in Token Prices

Coinbase

In the middle of the current crypto winter, Coinbase Global Inc. will introduce its first cryptocurrency derivative product on Monday.  According to a statement released on Thursday by the largest US cryptocurrency exchange, each nano Bitcoin futures contract (BIT) would represent 1/100th of the token. Only a few independent retail brokers and clearing companies, such as ABN AMRO and Wedbush, will have access to the contracts for trading.

Coinbase is entering the derivatives market after stating earlier this month that it would reduce its employment by 18% due to deteriorating market circumstances. An obvious gap in its product offering has long been futures and options, which allow investors to hedge their risks by agreeing to purchase or sell coins on a specific day at a specific price. Spot trading, which makes up the majority of Coinbase’s revenue, has drastically decreased this year.

Bitcoin prices have been declining due to liquidity problems at lender Celsius Network, hedge fund Three Arrows Capital, and similar spillovers at other funds and apps, Bitcoin experienced a steep decline in the previous few weeks after reaching an all-time high in November. According to tracker CoinMarketCap, Bitcoin has decreased by 29% over the past month.

Also, the value of Coinbase’s shares has decreased by close to 77 percent this year. Boris Ilyevsky, CEO of Coinbase Derivatives Exchange, stated:

“At 1/100th of the size of a Bitcoin, it requires less upfront capital than traditional futures products and creates a real opportunity for significant expansion of retail participation in US regulated crypto futures markets,”

The firm announced that the futures will be introduced through Coinbase Derivatives Exchange as a result of the recent acquisition of futures exchange FairX. To operate as a futures commission merchant and provide futures to customers directly, Coinbase Financial Markets is still awaiting confirmation of its license.

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