Coinbase, the most popular US platform to buy and sell cryptocurrencies, is set to launch its second micro-sized cryptocurrency derivative product on August 29.
Roughly two months after the launch of its ‘nano’ Bitcoin futures, Coinbase is bringing another level of diversification to cryptocurrency traders with a similar Ether futures contract. The move gives investors the opportunity to buy a contract linked to the price of one-tenth of ether.
If Nano Ether futures contract (ET) was available today, it would be priced around $155, based on an Ether price of $1,555 at the time of writing.
Nevertheless, customers can only purchase the Nano futures contract through third-party brokerages as Coinbase has yet to receive a license to operate as a futures commission merchant.
Similar to the Bitcoin contract, the Nano Ether futures will be made available for trading via the following retail brokers: EdgeClear, Ironbeam, NinjaTrader, Optimus Futures, Stage 5, and Tradovate, and clearing firms ABN AMRO, ADMIS, Advantage Futures, Dorman Trading, ED&F Man, Ironbeam and Wedbush.
Delving into in the $3 trillion crypto derivatives market came after Coinbase acquired FairX in January as part of its goal of offering crypto futures and options trading to its customers. FairX, which is registered with the federal Commodity Futures Trading Commission (CFTC), rebranded as Coinbase Derivatives Exchange.
Closely tied to its older brother, the smaller-sized contract is based on the same underlying reference index, and is settled in cash. The micro Ether futures will have just 1/10 of the notional value of the original contract.
It’s worth bearing in mind that the both Bitcoin and Ether nano futures contracts are not offered as leverage-type bets that drive volume on exchanges like Binance.
Coinbase said the move marks a new development in the crypto futures market that will give new access to retail investors, either those looking to branch into different markets or struggling to participate due to limited capitalization.
One-tenth of the size of standard contracts is introducing professional traders to many benefits when trading these limited-risk contracts. Declining prices led to a jump in open interest and trading volume for ether futures as investors sought to hedge their positions in the spot market by opening futures positions at the exchange.
“While still in its early stages, we believe that product innovation and an accessible entry point for the retail market have contributed to its success. At 1/100th of Bitcoin, our Nano Bitcoin futures contract requires less upfront capital, allowing participants to easily go long or short the price of Bitcoin and manage risk in volatile markets,” the exchange said.