Introduction
The acquisition of Deribit by Coinbase for an amount between $2.6 and $2.9 billion marks a significant step in the cryptocurrency market. This acquisition has substantial implications for investors and the market structure, as it significantly strengthens Coinbase’s position in the global derivatives market.
What is Deribit?
Deribit is the leading platform for trading crypto derivatives worldwide, particularly Bitcoin and Ethereum options. Over 85% of the global open interest in Bitcoin options is executed on Deribit, making the platform an important indicator of market sentiment. Deribit does not offer spot trades but focuses on high liquidity futures and options with tight spreads. The platform primarily targets experienced traders, hedge funds, and institutional investors.
The Acquisition by Coinbase
The acquisition of Deribit by Coinbase involves a purchase price of $2.9 billion, consisting of $700 million in cash and 11 million shares of Class A Coinbase stock. The deal is expected to close by the end of the year. With this acquisition, Coinbase strengthens its position as the leading global platform for crypto derivatives and expands its offering to include options trading.
Market Impact
- Market Structure: The integration of Deribit allows Coinbase to offer a comprehensive platform for spot, futures, perpetual futures, and options trading. This could alter the market structure by consolidating services and creating a more comprehensive offering for traders.
- Investors: For investors, the acquisition presents new opportunities as they gain access to a broader range of derivatives. Particularly, institutional investors could benefit from the strengthened position of Coinbase, as they now have access to a seamless and capital-efficient platform.
- Growth Potential: Coinbase sees immense growth potential in crypto options, similar to the boom of stock options in the 1990s. This acquisition positions Coinbase at the forefront of this development and could lead to further growth in the crypto market.
Overall, the acquisition of Deribit by Coinbase signifies a significant step in the company’s global expansion strategy and could influence the dynamics of the cryptocurrency market in the long term.