Altcoins

Binance Margin Borrowing Surpasses $100M Milestone

Christine Vasileva | Sep 19, 2019 | 12:00

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Binance, one of the leading crypto-to-crypto exchanges, shows growing activity in its margin trading offerings. As much as $100M in various digital assets were borrowed in a total of 21 margin trading pairs.

New Margin Pairs for Altcoins Added

Binance most recently added Dash (DASH) and ZCash (ZEC) pairings. So far, the selection for margin-trading markets is relatively conservative, as few altcoins have enough liquidity. Binance has attempted to minimize the risk with its rules for liquidations, but margin trading remains risky.

oh, btw. @binance Margin borrowing amount reached above $100m (USD equivalent) a few days ago.

Keep #buidling.

— CZ Binance (@cz_binance) September 19, 2019

Margin borrowing amplifies a trader’s position, but also the results, potentially leading to larger gains or losses. In crypto trading, high volatility has led to difficulties and risks. In the case of Poloniex, peer-to-peer lending allowed positions in a relatively illiquid, volatile altcoin. After the positions were liquidated, the lenders also lost the BTC that was borrowed for the risky trades.

On Binance, margin lenders are protected, since the riskiest positions are usually liquidated. Still, there is risk for the funds as they have to be kept within the exchange’s online wallets.

Binance Expands Products Portfolio

The expansion of margin trading is only one of Binance’s goals in decentralized finance. The exchange offers a growing portfolio of crypto finance products. Recently, futures pairs were launched for the most liquid Bitcoin market against Tether (USDT). Binance also opens lending mechanisms for several types of digital coins and tokens, left within the exchange’s wallets for annualized returns of up to 14%.

Binance opened its margin trading markets only this summer, during the time when BTC prices entered a period of heightened volatility. This led to an immediate liquidation of short positions. Binance margin trading launched officially in July.

Now, the expanded margin portfolio takes up a handful of altcoins. There are indications that an altcoin season may be in the making. However, altcoins remain volatile and price movements may lead to further liquidations.

Binance Coin (BNB) remained highly volatile, quickly erasing more than 9% overnight, to trade at $20.95. The asset, still one of the better performers in 2019, quickly shifts direction, as Binance immediately reflects the shift in sentiment and trading. BNB failed to get a boost from the news of an upcoming listing for the US markets as part of the initial selection of coins and tokens on Binance.US.

What do you think about Binance’s margin trade offerings? Share your thoughts in the comments section below!

Images via Shutterstock, Twitter @cz_binance