Key Insights
- Binance launched gold and silver perpetual futures contracts to meet the high demand for precious metals after a record-breaking price rally.
- These new contracts settle in Tether’s USDT stablecoin, allowing traders to hedge their digital assets without leaving the exchange.
- The perpetual futures track gold and silver prices 24/7. They also provide crypto users with tools that were previously found only in traditional brokerage accounts.
The world’s largest crypto exchange is now attempting to build a bridge between digital assets and traditional commodities.
On Thursday, Binance announced that it will list new perpetual futures contracts that track the prices of gold and silver.
This move comes as gold recently hit new highs and outperformed many top cryptos over the last year.
Related: Binance Junior App About to Build a Financially Independent Generation
The New Gold and Silver Perpetual Futures
Investors can now access XAU/USDT and XAG/USDT contracts directly through the Binance platform, and all of these assets use the Tether stablecoin for all settlements.
This means that traders do not need to worry about the logistics of physical metal storage or expensive bank wires. Instead, they can speculate on price movements using the same interface they use for Bitcoin.
The timing of this launch is not accidental. Gold prices soared roughly 67% over the past twelve months. The metal reached a staggering all-time high of $4,549 on December 26.
Notably, Silver followed a similar path and touched $83 after a massive 152% jump last year. This performance caught the attention of crypto traders who often look for high volatility and strong returns.
How Gold and Silver Perpetual Futures Work
Unlike traditional futures, these contracts never expire. This means that investors do not have to roll over their position every month to keep it open. They essentially bet on the price displayed on a digital scoreboard.
It is important to remember that investors do not own physical bars of gold. Instead, they simply trade based on the movement of the price.
Binance aggregates price data from several different vendors, and this makes sure that the quotes on the exchange stay in line with the global commodities market.
Users can trade these contracts even when traditional stock markets are closed. However, prices on the platform will only update once the underlying assets begin trading again in the real world.
Why Investors are Flocking to Precious Metals
Many experts are pointing toward the debasement trade as a reason for the current rally.
This theory indicates that government spending and money printing often erode the value of fiat currencies over time. When inflation stays above target levels, the US dollar and the euro lose purchasing power.
Investors then buy gold and silver because these metals have a finite supply. They also serve as a reliable store of value during times of economic uncertainty.
Crypto users are increasingly using these metals to diversify their portfolios. While Bitcoin slipped about 5% recently, gold and silver continued to climb. In other words, having access to gold and silver perpetual futures allows a trader to hedge their bets.
If the crypto market stays flat, they can seek gains in the commodities sector without moving their funds to a different broker.
The Role of USDT
Tether’s stablecoin (USDT) is becoming the main currency for these new financial products. Binance using USDT for settlement means that it is attempting to make the stablecoin a common checkout currency for traditional assets.
This is part of a larger trend where banks and institutions test stablecoins for faster transactions. Tokenised assets have already risen above $1 billion in value so far this year.
This also launches under the Abu Dhabi license held by Binance, which provides a layer of oversight that many offshore derivatives lack.
However, geography still plays a role in who can access these tools. While USDT is approved in Abu Dhabi, it faces different rules under Europe’s MiCA framework.
Disclaimer: BFM Times acts as a source of information for knowledge purposes and does not claim to be a financial advisor. Kindly consult your financial advisor before investing.
