Binance, the world’s largest cryptocurrency exchange by trading volume, today announced the launch of its margin trading platform, a service it says will support institutional investors. Users will now be able to choose from a spread of six of the leading cryptocurrencies to make margin trades: Bitcoin, Ethereum, XRP, Binance Coin, Tron and Tether.
Says Binance CEO Changpeng “CZ” Zhao,
“This is another step in providing an inclusive cryptocurrency trading platform catering to the needs of both advanced institutional traders and retail traders under the same roof. We are providing a new tool in the financial services and cryptocurrency markets to help amplify trading results of successful trades.”
Margin trading can be used to open both long and short positions, where a long position reflects an assumption that the price of the asset will go up, while a short position reflects the opposite. By allowing users to borrow funds from the broker, margin trading exposes traders to potentially huge gains as well as devastating losses.
According to the announcement, the Binance Margin Trading platform is hosted under a hybrid interface that accesses its exchange platform and the margin function for advanced crypto traders who want both functions under one user account. The 2.0 platform also features a trading engine for better order matching and margin level calculations to enable lower liquidations.
Users will be able to move funds from their margin wallet to a primary Binance wallet without any transaction fees and pay for margin trading fees with Binance Coin (BNB).
Binance joins several other crypto exchanges offering margin trading including BitMEX, OKEx, Kraken and Poloniex, allowing traders to leverage their bets and amplify moves in an already highly volatile market. With Binance reporting $2.6 billion in trading volume over the past 24 hours, according to data compiled by CoinMarketCap, it remains to be seen how an influx of leveraged trades from the crypto giant could impact the market.
Genesis Global Trading CEO Michael Moro says a key driver of Bitcoin’s recent whiplash, swinging from a high of $13,485.85 to a low of 10,373.75 within 24 hours, is borrowed money. He tells CNBC,
“Even the most optimistic crypto bulls would tell you that a 50%+ move in a week is too much too fast…
The presence of leverage exacerbates the moves in both directions and affects the speed dramatically.”
Speaking at the Asia Blockchain Summit in Taipei last week, CZ also showcased a futures trading interface that is expected to launch soon.
“Binance will be launching a futures platform very soon. I don’t have the exact date yet. The simulation test version will be live in a few weeks.”