The estranged multi-purpose Bitfinex exchange set to increase its margin trading capacity allowing for up to 100x leverage on its crypto derivative platform.
Bitfinex, the cryptocurrency exchange with multiple platform services as Margin Trading, Margin Lending and OTC (Over-The-Counter) which allows for an off-exchange trading mechanism, is set to extend its margin trading capacity to up to 100x leverage.
The multi-national exchange originally registered in the British Virgin Islands but having its headquarters in Hong Kong, has in recent times been levied with fraud allegations ranging to the tune of a surmounted loss of $850 million custom funds.
And in a bid to recuperate, the crypto platform has decided to boost user’s trust, by incorporating an increased marginal trading instrument. Although Bitfinex, already offers a marginal trading device that allows for up to 3.3x leverage. With future plans to expand its margin trading features into its derivative trading.
In a recent tweet, Paolo Ardonio – the CTO of Bitfinex, cited that this new merchandising tool would permit users exchange on a 1:100 leverage.
— Paolo Ardoino 🍐 (@paoloardoino) June 24, 2019
Ardonio further explained that the exchange has been accumulating customer’s marginal trading data over time. This granted the Fintech Company ample opportunity to better understand the position sizing requirements necessary to guarantee assured preservation and multiplication of customers’ financial assets.
Margin trading in its own light is an asset trading methodology that involves the use of external funds from third-party investors to trade. By means of this trading methodology, investors can leverage their position by garnering access to a larger pool of funds.
As a result of the high volatility of the cryptocurrency market, high leverage positions could amount to huge gains and colossal losses as well. In relation to this, Bitmex, being the only crypto exchange that currently allows for 1:100x marginal trading index, has registered a humongous amount of traders’ loss due to an uncalculated use if this leverage system.
What stands to be a dilemma is whether Bitfinex could ensure its users from over-leveraging. However, considering the profits involved in the isolated margin — which is the initial liability added to an open position, the Exchange could control how much capital is at risk so that in the event of a liquidation, the available balance on their accounts will not be added to the margin position.
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