Popular cryptocurrency exchange Bitfinex is apparently going to extend its margin trading capabilities, according to the company’s Chief Technology Officer, Paolo Ardoino. The new developments will allow traders to use as much as 100x leverage.
Following In The Footsteps of BitMex
Bitfinex, the popular cryptocurrency exchange which is also associated with stable coin issuer Tether, will be adding expanded leverage trading capabilities to its platform.
According to CTO Paolo Ardoino, users will be able to use as much as 100x leverage, which is what BitMex exchange traders can currently use.
— Paolo Ardoino (@paoloardoino) June 24, 2019
Up until this moment, Bitfinex only allows its users to post a margin of 3.3x so the new implementation will be a substantial increase.
Ardoino also revealed some additional information on the matter. He said that the option will only be available for verified users. Additionally, he said that at first it would only be isolated margin trading at the beginning as this is “better for risk management.”
Isolated margin means that the liability of the trader is limited to the initial margin which is posted. In this case, if it comes to a liquidation of the position, the available balance that the trader might have won’t be used to add margin to his position. This is a tool used to limit one’s losses to the initial margin which is set.
It’s particularly appropriate for volatile markets such as the cryptocurrency one because a highly leveraged position can lose its equity very quickly.
We have yet to see when the changes will be implemented and what the additional conditions will be.
Is It Good or Bad?
Ardoino’s announcements immediately sparked a discussion of whether or not this is good for the traders. While some of them pointed out that 3.3x margin is already good enough, Ardoino said that the new leverage capabilities are entirely optional and up to the trader.
Margin trading comes with increased risk of losing your capital and it should only be executed following well-informed and well-timed decisions. However, it can also be used as a means to extend your profits without having to deposit additional funds on your own.
In any case, we can also see that there is an obvious demand as more exchanges are moving to add margin trading. As Cryptopotato reported earlier this month, the world’s leading cryptocurrency exchange, Binance, also added margin trading capabilities on selected trading pairs.
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