Binance Jumps to 125X Leverage
The Binance market took on BitMex with a stratospheric leverage offer of 125X, raising eyebrows even among risky players.
Binance, which recently showed record activity on its futures market, has become even more aggressive in its margin trading offerings. Now, Binance has allowed leverage up to 125X.
Binance started off with rather conservative margins, while touting its sophisticated liquidation engine. The exchange has a sliding scale of leverage selection, with no leverage also an option, and 20X the default option. However, with higher leverage, the size of the maximal position is lowered.
“At the baseline level, we allow for 125x margin; a 100 USDT collateral deposit can hold 12,500 USDT worth of BTC. This number will change depending on the size of the position - the larger the position, the lower the leverage allowed,” Binance explained its approach in a user manual.
Commenters saw the move as adding another tool for speculation, thus adding to the image of crypto markets as highly risky. Calvin Ayre, in a critical comment, stated that the new leveraged position would liquidate traders with just a $50 BTC price move, thus leaving the exchange richer.
Binance announced the move after its last quarter revealed significant success. The increased leverage may also boost the exchange’s earnings, as it invites riskier bets. Binance has attempted to offset a flagging altcoin market, while offering opportunities to harness assets in alternative ways.
The exchange has become a close competitor of BitMex, both through its futures markets and the extreme maximum leverage.
Binance has grown its infrastructure since its launch, ending up with a $1 billion cumulative earnings. However, some of those earnings are in crypto coins, and will most probably be burned to decrease the supply of Binance Coin (BNB), or redirected to other projects.
In the latest coin burn for October, Binance destroyed above 2 million BNB.
Following the recent news of leveraged trading, BNB kept to its price range of $18.31, slightly down after the recent BTC correction.