Coinbase Institutional has announced plans to list XRP futures contracts, a move that has garnered significant attention given the current negative funding rates indicating prevailing bearish sentiment.
The prominent US cryptocurrency exchange has formally submitted an application to the US Commodity Futures Trading Commission (CFTC) seeking approval to launch futures contracts for Ripple's XRP token.
Details of Coinbase's XRP Futures Proposal
On April 3rd, Coinbase Institutional stated: "We are pleased to announce that Coinbase Derivatives has submitted a self-certification application to the CFTC to list XRP futures contracts—providing investors with a regulated, capital-efficient way to gain exposure to this highly liquid digital asset."
The company further indicated that it anticipates the contracts to officially launch by April 21st, pending regulatory clearance.
According to the certification filing, the proposed XRP futures contract will be a monthly cash-settled, margined contract with the trading symbol XRL. This contract will track the price of XRP and will be settled in US dollars. Each contract will represent 10,000 XRP tokens. At the current approximate price of $2 per token, the value of a single contract would be around $20,000.
Trading will be available for the current month and the next two consecutive months' contracts. As a safety mechanism, trading will be temporarily halted if the spot XRP price experiences a fluctuation exceeding 10% within a one-hour window.
Coinbase confirmed it has engaged with Futures Commission Merchants (FCMs) and other market participants, securing support for the introduction of these XRP futures contracts.
The Competitive Landscape for XRP Futures
It is important to note that Coinbase is not the first US-based platform to venture into XRP futures. In March, the Chicago-based crypto exchange Bitnomial announced the launch of the first CFTC-regulated XRP futures product in the United States.
Globally, XRP futures trading is already available on several major centralized cryptocurrency exchanges, providing liquidity and access to a wide range of traders. 👉 Explore more trading strategies across different asset classes to diversify your approach.
Understanding Negative XRP Funding Rates
In late March, reports highlighted that funding rates for XRP derivatives had turned negative, signaling a shift in investor sentiment toward a bearish outlook.
The funding rate is a periodic fee exchanged between traders in perpetual swap markets—specifically between longs (buyers) and shorts (sellers). This mechanism is designed to tether the futures contract price closely to the underlying spot price.
A positive funding rate indicates that longs are paying shorts to maintain their positions, typically reflecting bullish sentiment. Conversely, a negative funding rate means shorts are paying longs, which usually signifies that bearish sentiment is dominant in the market.
A negative funding rate suggests that short sellers are willing to pay a premium to keep their positions open, often reflecting a strong prevailing belief that the asset's price will decrease.
Data from analytics platforms shows that as of April 4th, the weighted funding rate for XRP across major derivative exchanges remained in negative territory, confirming the continued bearish pressure.
Frequently Asked Questions
What are XRP futures contracts?
XRP futures are standardized legal agreements to buy or sell XRP at a predetermined price at a specified time in the future. They allow traders to speculate on the future price direction of XRP or to hedge existing holdings against price volatility.
Why are negative funding rates significant?
Negative funding rates are a key indicator of market sentiment in derivatives trading. They show that short sellers outweigh long buyers and are willing to pay to maintain their positions, which often points to a bearish outlook for the asset in the near term.
How does Coinbase's application differ from Bitnomial's product?
While both are regulated by the CFTC, they are offered by different exchanges. The specific contract specifications, such as size (10,000 XRP for Coinbase), margin requirements, and trading interface, will vary between the Coinbase Derivatives and Bitnomial platforms.
Who can trade these regulated XRP futures?
These products are typically designed for and accessible to institutional investors and qualified individuals through approved Futures Commission Merchants (FCMs) on the respective derivatives exchanges, subject to account approvals and jurisdictional rules.
What does cash-settled mean?
Cash settlement means that when the futures contract expires, no physical XRP tokens are delivered. Instead, the trade is settled in US dollars based on the difference between the entry price and the final settlement price of XRP.
Could the launch of futures impact XRP's spot price?
The launch of new futures products can increase overall market attention and trading volume for an asset. While it can lead to short-term volatility, it also provides more tools for price discovery and risk management for institutional participants.