Bitfinex Upgrade Adds 100x Leverage for Bitcoin

Cryptocurrency exchange, Bitfinex has finally launched its margin trading system, allowing users to wager on the price of Bitcoin (BTC) and Ethereum (ETH) with up to 100x leverage.

Bitfinex announced the completion of its upgrade on Monday, and while the product was relatively underplayed users have been quick to point out the new addition:

The derivatives product has been under development since May. Bitfinex revealed details about the leverage increase as well as the chosen collateral within the LEO whitepaper:

Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet. The product will have USDT-based collateral (unavailable in the rest of the market), up to 100x leverage and isolated margin for individualized risk level.

While margin trading was available on the exchange prior to the upgrade, users were only offered 3.3x leverage.

High-risk High Reward

Margin trading doesn’t come without its price, and the price is often remarkably high. Essentially, Trading using leverage allows users to borrow funds against their existing capital to increase buying power. Win a trade with high leverage, and the rewards speak for themselves. However, with the crypto market's trademark volatility margin trading is especially risky, particularly when leverage is set at 100x.  

Bitfinex is now the third major crypto exchange to implement such a lofty level of leverage, the other two being BitMEX and Deribit.

On September 2, $68 million in bitcoin shorts evaporated as BTC exhibited an explosive 6% move up.

BTC shorts on BitMEX$68 million in BTC shorts liquidated on BitMEX. Source: Coin360

BitMEX has often been criticized offering such high leverage, with a plethora of users who can attest to the dangers of margin trading. The exchange's reputation for liquidating traders is such that there are several twitter accounts dedicated to monitoring each blown position:

Margin trading is becoming an extremely popular instrument. In fact, more and more cryptocurrency exchanges are scrambling to offer some iteration of this derivative product.

Notably back in July, Binance moved to launch its own highly anticipated margin trading platform. Although, unlike Bitfinex, Binance chose to ease users in a little, capping leverage at 3.3x.

Coinbase Preparing for Stock Market Listing as Early as This Year: Report

San Francisco-based cryptocurrency exchange Coinbase has reportedly started preparing for a stock market listing that could come as early as this year.

The move would make Coinbase the first major U.S.-based cryptocurrency exchange to go public, but the listing would require the U.S. Securities and Exchange Commission’s (SEC) blessing. According to Reuters, one source claimed the exchange is considering a direct listing instead of a traditional initial public offering (IPO).

While in an IPO new shares are created, underwritten and sold to the public, in a direct listing no new shares and created and only outstanding shares are sold, with no underwriters involved. Reuters quoted three people familiar with the matter, who requested anonymity because the listing preparations are reportedly confidential.

Coinbase has not yet registered its intention to go publish with the SEC, but has already reached out to investment banks and law firms. The cryptocurrency exchange was valued at $8 billion in its latest private fundraising round in 2018.

It was founded in 2012 and now has over 35 million users, allowing them to trade various cryptoassets both on its Coinbase platform and on the Coinbase Pro platform. It also has multiple other services, including Custody, Commerce, and Earn.

The San Francisco-based firm’s bitcoin holdings are estimated to now be over 1 million BTC, as users deposit funds on it over time. Last month Coinbase revealed it suffered outages after seeing its traffic spike significantly in a few minutes, as the price of most cryptocurrencies moved abruptly.

As CryptoGlobe reported, CryptoCompare’s June 2020 Exchange Review showed Coinbase was the third-largest top tier crypto exchange by trading volume in May, trading $6.86 billion worth of crypto throughout the month, falling behind OKEx and Binance.

Featured image via Unsplash.