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Financial Markets Feud: Coinbase Launches Oil and Gold Futures, CME Targets Bitcoin Spot Market
(Kitco News) – A potential feud between the West Coast and East Coast is brewing in the financial markets as two major exchanges insinuate themselves into each other.
Last week, Coinbase Derivatives, the leading US cryptocurrency derivatives exchange, announced that it would launch retail oil and gold futures on June 3.
“After launching Bitcoin, Ethereum, Bitcoin Cash, Litecoin and Dogecoin futures, we noticed a growing demand for retail-focused products on an accessible and regulated exchange. Therefore, we are excited to extend these benefits to gold and oil futures and provide investors with cross-hedging opportunities across asset classes,” the company said in a statement from press.
The company said the size of the futures contracts will be based on 10 barrels of oil and 1 troy ounce of gold. Oil futures will trade under the symbol NOL and gold futures will trade under the symbol GLD.
“We believe that offering our participants access to futures contracts on traditional commodities like oil and gold, alongside crypto commodities, is a natural expansion of our product range. We look forward to seeing these contracts mature and the liquidity they will bring to retail and institutional investors in a regulated manner,” the cryptocurrency exchange said.
The Coinbase futures announcement came on the same day that the Financial Times reported that CME Group, the world’s leading derivatives market, was in talks to launch a Bitcoin spot market, in direct competition with Coinbase.
The crypto spot market would complement CME’s Bitcoin futures, which, with an open stake of 31,000 contracts, is one of the largest exchanges in the world, taking the title from Binance in 2023.
According to the FT article, hosting both a BTC spot and futures market would allow CME traders to conduct so-called basis trades, a common strategy that involves borrowing money to sell futures contracts while purchasing the underlying asset and extracting gains in the small market. gap between the two.
The FT only spoke to “sources” with direct knowledge of the negotiations, and CME declined to comment on the article.
Although Coinbase is the leading cryptocurrency exchange in the United States, it faces an uphill battle in the broader futures market as CME has a nearly 50-year history with its gold futures contracts. .
The London Metals Exchange, the world’s source for base metals, could not compete with CME in precious metals. The LME closed its gold futures contracts in July 2022 due to low trading volume.
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