Coinbase, the most popular US platform for buying and selling cryptocurrencies, is set to launch its second micro-sized cryptocurrency derivative product on August 29.
About 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 option to buy a contract tied to the price of one tenth of ether.
If the Nano Ether (ET) futures contract were available today, its price would be around $155, based on an Ether price of $1,555 at the time of writing.
However, customers can only purchase the Nano futures contract through third-party brokers, as Coinbase has not yet received a license to operate as a futures commissioner.
Similar to the Bitcoin contract, Nano Ether futures will be available for trading through 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.
The exploration of the $3 trillion crypto derivatives market came after Coinbase acquired FairX in January as part of its aim to offer crypto futures and options to its clients. FairX, which is registered with the federal Commodity Futures Trading Commission (CFTC), rebranded as Coinbase Derivatives Exchange.
Closely related to its older sibling, the smaller contract is based on the same underlying benchmark and is cash settled. Micro Ether futures contracts will only have 1/10 of the notional value of the original contract.
It should be kept in mind that Bitcoin and Ether nano futures are not offered as leverage-type bets that generate volume on exchanges like Binance.
Coinbase said the move marks a new development in the crypto futures market that will give retail investors new access, whether they are looking to diversify into different markets or are struggling to participate due to limited capitalization.
One-tenth the size of standard contracts offers professional traders many advantages when trading these limited-risk contracts. Lower prices have led to an increase in open interest and trading volume for ether futures, as investors seek to hedge their positions in the spot market by opening futures positions on the exchange.
“Although still in its infancy, 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 initial capital, allowing participants to easily go long or short the price of Bitcoin and manage risk in volatile markets,” said the stock Exchange.