Coinbase Launches XRP Futures Trading: What You Need to Know

Coinbase Institutional Files for XRP Futures Trading with CFTC

US crypto exchange Coinbase has filed with the US Commodity Futures Trading Commission (CFTC) to launch futures contracts for Ripple’s XRP token. Coinbase Institutional announced on April 3 that they are excited to introduce XRP futures, providing a regulated and capital-efficient way to gain exposure to one of the most liquid digital assets. The firm stated that they anticipate the contract to go live on April 21.

According to the certification filing, the XRP futures contract will be a monthly cash-settled and margined contract trading under the symbol XRL. Each contract represents 10,000 XRP, which is currently valued at about $20,000 at $2 per token. The contract tracks XRP’s price and is settled in US dollars. Trading can be done for the current month and two months ahead, with trading paused as a safety measure if spot XRP prices fluctuate more than 10% in an hour. Coinbase mentioned that they have received support from Futures Commission Merchants (FCMs) and market participants for the launch of the XRP contract.

Coinbase is not the first to introduce XRP futures in the United States, as Chicago-based crypto exchange Bitnomial had already announced the launch of the first-ever CFTC-regulated XRP futures in the US earlier in March. XRP futures trading is available on various centralized crypto exchanges globally, including Binance, OKX, Bybit, and BitMEX.

Funding Rates Remain Negative

In late March, XRP derivatives’ funding rates turned negative, reflecting a bearish investor sentiment. Funding rates are periodic payments between traders in perpetual futures markets designed to align the futures price with the spot price. Positive funding rates imply that long traders pay short traders, while negative funding rates indicate that short traders pay long traders. When funding rates are negative, it suggests that short traders are willing to pay a premium to maintain their positions, signaling strong conviction from bearish derivatives traders.

As of April 4, XRP funding rates continued to remain negative on major derivative exchanges, according to CoinGlass. This negative trend in funding rates showcases the prevailing bearish sentiment among traders.

Conclusion

In conclusion, the filing by Coinbase Institutional to launch XRP futures trading with the CFTC marks another milestone in the cryptocurrency industry. With the increasing interest in derivatives trading for digital assets like XRP, it showcases a growing demand for regulated and efficient ways to trade cryptocurrencies. As the market continues to evolve, it will be interesting to see how these developments shape the future of cryptocurrency trading.