Crypto exchange giant Coinbase made an official announcement on Twitter stating that it will list perpetual futures contracts for two major altcoins.
The announcement revealed that Coinbase will introduce support for Solana (SOL) and Avalanche (AVAX) perpetual futures contracts. The exchange plans to launch this futures support on Coinbase International Exchange & Coinbase Advanced.
According to the announcement, SOL-PERP and AVAX-PERP markets are set to be rolled out on November 14, contingent upon liquidity conditions. Perpetual futures are a form of derivative contract enabling traders to speculate on the continuous price movements of the underlying asset. These contracts offer various advantages such as arbitrage, leveraging, and hedging opportunities but also come with risks like over-leveraging, liquidation, and increased volatility.
Coinbase Advanced had introduced perpetual futures trading in October for customers in eligible jurisdictions outside of the United States. Initially, it announced four perpetual contracts for Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP).
These contracts come with leverage options, allowing for up to 5X leverage, with Ripple offering up to 3X leverage. Notably, all perpetual futures contracts on Coinbase Advanced are settled in the USD Coin (USDC) stablecoin.
It’s important to note that Coinbase adheres to local regulations governing crypto derivatives. As a result, perpetual futures trading on the Advanced Trading platform is only accessible to users in specific non-US regions, as specified by the exchange.
In September, Coinbase International Exchange received regulatory approval from the Bermuda Monetary Authority to offer perpetual futures for non-US customers.
Demand for Crypto Perpetual Futures
Perpetual futures have become one of the most popular derivatives contracts in the crypto markets, driving increased demand.
As of November 10, global centralized exchange (CEX) perpetual volume reached $195.3 billion, according to data from Laevitas. Binance, a competitor to Coinbase, recorded the highest volume, followed by the OKX exchange.
Conor Ryder, a research analyst at Kaiko, noted that the Bitcoin perpetuals-to-spot-volume ratio is at its highest in almost two years. He added that perpetuals, commonly referred to as “perps” in industry jargon, “don’t expire and have been hugely popular with traders.”
The introduction of the perpetual contract by crypto exchange BitMEX in 2016 marked the beginning of its popularity. Due to its simplicity, the product initially attracted retail traders, prompting many exchanges to follow BitMEX’s lead by introducing their own perpetual contracts.