Binance now allows margin trading on its exchange, and it is still going through the testing phase. In a Twitter announcement, CEO of the leading cryptocurrency exchange, Changpeng Zhao said that the world’s largest exchange was finally bringing the long-promised feature to its customers.
In the announcement, CZ mentioned that while Bitcoin was “on a tear on price”, Binance 2.0 is being released for everyone and it will be bringing margin trading.
— CZ 🔶 Binance (@cz_binance) June 26, 2019
Two days and the first liquidation
It has only been two days since the margin trading was announced and there was already one high profile liquidation on the exchange. In another Twitter missive, the CEO affectionately known as CZ in the cryptocurrency world said very plainly – don’t bet against Bitcoin.
The world’s first cryptocurrency margin liquidation was not a surprise to anyone. Margin trading is extremely dangerous in volatile markets. It was in fact meant for traders to get larger gains from slower moving markets such as forex, where the changes are not as large.
The reason many have been clamoring for margin trading in crypto is due to the massive gains that can be made with margin trading – which comes at a huge cost. If the bet is wrong, then the amount lost can be multiple times more than those seen on traditional trading platforms.
Margins a new trend in crypto
Bitfinex is preparing to offer its customers 100x leverage (something that BitMEX already offers) and there is speculation among the general crypto community that many more exchanges will follow this trend. The question many are asking – is it worth it? Does crypto really need margin trading when the price is so volatile that giant profits can be amassed without the need to inflated them?
Bitfinex CEO Paolo Ardoino says that there will be appropriate measures in place to safeguard customers. One such measure is the “steep margin requirement”. In simple terms, this means that anyone looking to go big with that kind of leverage will need to put in a vast amount of money in the first place.
He also adds that this will be another instrument for customers, and will not replace the current 3.3X leverage that BitFinex offers. However, there are many in the industry that are wary of Bitfinex. The company is still in the crosshairs of the New York State Attorney’s Office.
Subsequently, none of that is a problem for Binance, they just keep growing. The world’s largest exchange will keep getting bigger so long as they take risks, but there must be caution. The quick liquidation on its exchange is proof perfect of this and how much Binance does to mitigate the actions of new traders is going to be a key component of Binance’s continued rise.
The currency based on the Binance blockchain is also growing steadily and has come close to breaking the $40 barrier. Their DEX has also seen more and more support from a wide swathe of the industry. All in all, it seems as if Binance is simply becoming unstoppable.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.