Leading cryptocurrency exchange Coinbase is set to add support for perpetual futures contracts in two major altcoins, Solana (SOL) and Avalanche (AVAX).
The company announced that it will open the SOL-PERP and AVAX-PERP markets on the Coinbase International Exchange and Coinbase Advanced platforms on November 14 at around 4 PM UTC, if liquidity conditions are met.
Perpetual futures are derivative contracts that allow traders to speculate on the future price of an asset, in this case, crypto, without an expiration date. Unlike traditional futures, investors can trade perpetual futures for an indefinite period.
Coinbase Lists SOL and AVAX Perpetual Futures For Investors Outside The US
Coinbase launched its perpetual futures trading platform Coinbase Advanced last month. The platform initially offered derivatives for Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP), with leverage options and settlement in USDC stablecoin. This has now been expanded to include SOL and AVAX.
In September, the company was granted regulatory approval by the Bermuda Monetary Authority to offer crypto-backed perpetual futures to institutional and retail traders “in specific regions” outside the United States through the Coinbase International Exchange.
Experts view the move as a masterstroke by the company as it is catering to the diverse needs of traders in the crypto market. Coinbase’s crypto perpetual futures contracts offer flexibility for various trading strategies, including arbitrage, leveraging, and hedging.
Despite the popularity of these trading strategies, they possess a high-risk factor, with the potential for over-leveraging and liquidation, which necessitates prudent risk management by investors.
Coinbase’s futures perpetual provides leverages of up to 5x on all listed crypto assets, with the exception of Ripple (XRP), which offers 3x leverage. Despite the highly volatile nature of the crypto market, Coinbase has added an extra layer of stability to these transactions by offering settlement in USD-denominated stablecoins.
Perpetual Futures Contracts are Gaining Traction Among Crypto Traders
The introduction of crypto-focused perpetual futures contracts has increased interest and demand for the digital asset class among traders. According to data provided by crypto analytics platform Laevitas, as of November 10, the perpetual volume of global centralized exchange (CEX) has reached $195.3 billion.
Meanwhile, an analyst at Kaiko pointed out that the perpetual-to-spot-volume ratio of Bitcoin is currently at its highest level in nearly two years.
Apart from Coinbase, crypto exchanges Binance and OKX also offer crypto perpetual futures trading on their respective platforms.
Solana and Avalanche are Rallying The Most in The Altcoin Market
Coinbase’s latest announcement also comes at a time when both Solana and Avalanche are experiencing their strongest rally in months.
SOL has gained nearly 50% in value over the past seven days, while the price of the sixth-largest cryptocurrency by market cap has surged by a staggering 165% over the last month. At the time of writing, Solana is trading at $59.21 – a 6.7% increase from the previous day’s price.
At the same time, the AVAX token powering the Avalanche blockchain has also been making strong moves in the market. In the last week, the token gained over 45% in value and is closing in on the $20 mark. AVAX is currently trading at $19.07 – up around 10% in the last 24 hours.