Bitfinex, one of the world’s largest cryptocurrency exchanges, has announced that it has increased its maximum leverage in margin trading for popular cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and XRP. For cryptocurrency pairs such as XRP/USD, XRP/BTC, BTC/EUR, BTC/USDT, BTC/USDT, ETH/USDT, and LTC/USD the maximum leverage will be capped at 5x.
According to the announcement released by Bitfinex,
“Margin trading enables traders to borrow funds to increase leverage, offering the potential for greater profits than in traditional trading. Still, the potential for greater rewards also comes with higher levels of risk, particularly given the volatility of digital assets.”
This is a crucial development as cryptocurrencies such as Bitcoin and Litecoin have seen significant volatility over the past month. In fact, the 30-day volatility chart for BTC and LTC paired with USD shows a steady increase in the volatility of both coins.
Source: 30-Day BTC/USD, LTC/USD Volatility, BitPremier
Further, according to data from skew markets, the aggregated Open Interest for Bitcoin Futures on Bitfinex has also seen a significant rise right from the start of 2020. Bitfinex announcing an increase in maximum leverage today could be a move in anticipation of an increase in trading on the platform as the Open Interest continues to climb upwards.
Source: BTC Futures – Aggregated Open Interest, Skew
When compared to other exchanges like Kraken and Poloniex which at the moment offer the same leverage as Bitfinex at 5x, the taker fees in the case of Kraken are a lot lower at 0.02%, while Bitfinex just like Poloniex, has a higher taker fee of 0.2%.
While the 5x leverage may have been planned to increase potential activity, other exchanges continue to be highly competitive.
