Bitcoin continues to show strength as it trades near its all-time high, following a positive week that saw several developments in the crypto space. One of the most anticipated events was the launch of the first Bitcoin futures ETF in the US, which attracted over $1 billion in assets under management in its first two days of trading.
The ProShares Bitcoin Strategy ETF (BITO) tracks the price of Bitcoin futures contracts, not the spot price of Bitcoin itself. However, many analysts see this as a stepping stone for a potential approval of a Bitcoin spot ETF, which would directly track the price of the underlying asset and offer lower fees and tracking errors.
A Bitcoin spot ETF would be a game-changer for the crypto industry, as it would provide an easy and regulated way for retail and institutional investors to gain exposure to Bitcoin without having to deal with the technical and security challenges of buying and storing it. Moreover, it would boost the liquidity and efficiency of the Bitcoin market, as well as its legitimacy and adoption. Several applications for a Bitcoin spot ETF are pending with the US Securities and Exchange Commission (SEC), which has until November 14 to make a decision on one of them, filed by VanEck.
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Some observers believe that the success of the Bitcoin futures ETF could pave the way for a positive outcome for the spot ETF, as it shows that there is strong demand and interest for such products. Moreover, it could alleviate some of the concerns that the SEC has expressed about the Bitcoin market, such as fraud, manipulation, volatility and lack of regulation.
The SEC chairman Gary Gensler has indicated that he is more open to approving a futures-based ETF than a spot-based one, but he has also acknowledged that the crypto space is evolving rapidly, and that the agency is willing to adapt to the changing landscape.
Therefore, the launch of the Bitcoin futures ETF could be seen as a dress rehearsal for a possible approval of a Bitcoin spot ETF in the near future. If that happens, it could trigger a new wave of adoption and innovation in the crypto space, as well as a significant increase in the value of Bitcoin and other cryptocurrencies. For now, Bitcoin holders can enjoy the momentum that the futures ETF has created, and hope that it will lead to more positive developments down the road.
Coinbase retail customers outside USA can now trade perpetuals.
Coinbase, the leading cryptocurrency exchange platform, has announced a new feature for its retail customers outside the US: the ability to trade perpetual contracts. Perpetual contracts are a type of derivative product that allow traders to speculate on the price movements of cryptocurrencies without having to own or deliver the underlying asset. Unlike futures contracts, which have a fixed expiration date, perpetual contracts have no expiry and are settled on an ongoing basis.
Perpetual contracts offer several advantages for traders who want to gain exposure to the volatile crypto market. They can amplify their profits (or losses) by using leverage, which means borrowing funds from the exchange to increase their trading power. They can also benefit from price movements in both directions, by going long (buying) or short (selling) the contract. Additionally, they can avoid the hassle and risk of storing and transferring cryptocurrencies, as they only need to deposit and withdraw fiat currency or stablecoins.
Coinbase’s perpetual contracts are based on the Coinbase Index, which tracks the weighted average price of Bitcoin and Ethereum across multiple Coinbase markets. The contracts are denominated in USDC, a stablecoin pegged to the US dollar, and have a maximum leverage of 10x. Coinbase charges a funding rate every eight hours to keep the contract price aligned with the spot price, as well as a trading fee of 0.075% for makers and 0.25% for takers.
Coinbase’s launch of perpetual contracts is part of its broader strategy to expand its product offerings and reach new markets. The exchange already offers spot trading, margin trading, staking, lending, and custody services for its customers, as well as institutional-grade products and services for professional traders and investors. By adding perpetual contracts, Coinbase aims to compete with other platforms that already offer this feature, such as Binance, BitMEX, and FTX.
Coinbase’s perpetual contracts are currently available for retail customers in over 40 countries outside the US, including Canada, Mexico, Brazil, UK, Germany, France, Japan, Singapore, and Australia. The exchange plans to roll out this feature to more countries and regions in the future, as well as to add more cryptocurrencies to its index. Coinbase also intends to launch perpetual contracts for its US customers in the near future, pending regulatory approval.