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Coinbase Bitcoin Nano Futures Sees Volumes Spike but Spot Markets Shrink

Coinbase Launching Nano Bitcoin Futures in Pitch to Retail Investors

Coinbase is one of the largest cryptocurrency exchanges by trading volumes, but it has also been largely affected by the crypto winter. Coinbase announced it would lay off 18% of its staff in May because of the market conditions. It was also recently overtaken by Binance in having the largest Bitcoin holdings.

However, Coinbase is still innovating with new products to attract and retain users. In June, the company launched the Nano Bitcoin futures product. The product is amassing high trading volumes.

Coinbase Nano futures records increased volumes

In May last year, Coinbase had one of the largest shares of trading volumes in the cryptocurrency market. At the time, the exchange’s volumes were around $200 billion. However, in July this year, Coinbase’s trading volumes were around $59 billion.

The company is already seeing increased trading volumes for the newly launched derivatives unit. Retail trades for the nano Bitcoin futures product reached record highs on three consecutive days last week.

The Nano Bitcoin futures product was launched towards the end of last month. The product offers a cash-settled futures contract with 1/100th of one Bitcoin. The product is available across several retail brokerage firms such as EdgeClear, NinjaTrader, and Wedbush.

During the launch of this product, the head of Coinbase Derivatives Exchange, Boris Ilyesky, said that the product was suitable to retail traders because it needed less capital than traditional futures products. Moreover, the product offered a better opportunity for people to expand toward retail trading within the US crypto futures market.

On July 19, the volumes for the nano derivatives product reached 217,045 after a steady increase. However, the volumes declined to 117,493 on July 22. The trading volumes were below 50,000 contracts traded daily between June and July. An email the Coinbase sales team sent said that the company reported a significant increase in activity since the retail brokers started marketing and promotional campaigns.

Coinbase ventured into the crypto derivatives space in 2022 following the acquisition of FairX. The latter is a derivatives platform regulated by the Commodity Futures Trading Commission, competing with firms like FTX.

Coinbase’s performance during the crypto winter

The ongoing crypto winter has claimed many companies that have closed their doors because of the ongoing crypto winter. The declining liquidity has led to comparisons of Binance vs. Coinbase, as the former has hired more than 2000 new employees amid the tough market conditions.

Binance also launched zero-fee Bitcoin trading, which has seen some users move from Coinbase to escape the high trading fees. This migration could be behind Binance’s recent accomplishment of having the largest Bitcoin holdings among all exchanges.