Binance taps historic gold rally by launching commodities futures markets

Binance is tapping into traditional markets.

The world’s biggest crypto exchange announced on Thursday that it will list new perpetual futures contracts tracking the prices of gold and silver in a push to take advantage of the increased investor interest in these assets.

The new contracts will be settled using Tether’s USDT stablecoin. Users will be able to trade the new contracts outside of traditional market hours, however, prices won’t update until the assets begin trading again.

Jeff Li, VP of product at Binance, said the move marks a key step in bridging traditional finance and crypto, and creates new opportunities for the exchange’s customers.

It comes as gold soared some 67% over the past year to a $4,549 all-time high on December 26, outperforming Bitcoin and most other major crypto assets.

The yellow metal has benefitted from the so-called debasement trade. This is the idea that government policies that spur excessive money printing, increases to deficits, and above-target inflation erode the value of fiat currencies like the US dollar, Japanese yen, and euro.

To protect themselves against this erosion, investors are flocking to gold, which is perceived as a reliable store of value due to its finite supply.

What are Perps?

Perpetual futures contracts, or perps, are a type of derivative that lets holders speculate on an asset’s future price. Unlike regular futures contracts, perps don’t expire, removing the need for investors to roll them over each month.

Perps, however, don’t own the underlying asset — they just track its price. Binance says it aggregates price data from multiple vendors to ensure quote prices for its gold and silver contracts are in line with the broader market.

Binance isn’t the only perps venue offering gold and silver contracts. Lighter, a decentralised futures exchange, introduced gold and silver perps shortly after its October launch.

So far, demand has been moderate, with the exchange’s gold perps handling around $9.2 million in open interest.

Binance said it is actively working to expand its gold and silver perps with more trading pairs, but did not specify which assets are being prioritised.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.