“Our leverage is based on market analysis,” a Coinbase representative told CoinTelegraph in an email. “We are implementing this in a way that we feel accountable to our customers while providing them with an appropriate leverage to trade.”
Coinbase Pro users operating in 23 states can now trade with leverage on Coinbase Pro, according to notification on the company's blog on 12/02.
Coinbase Pro supports a relatively modest leverage of 3x, while exchanges like BitMEX and Binance offer leverage up to 100x and above. “We will monitor the market and customer usage from which we plan to evaluate this feature on an ongoing basis,” a Coinbase spokesman said when answering questions about potential plans. future capabilities of the company.
What is margin trading?
As a common product in the space of professional asset trading, margin trading (trading margin) basically involves borrowing the exchange's capital to trade on a per-transaction basis.
Coinbase says its Pro platform currently offers 3x leverage, so users with 1 Bitcoin (BTC) can participate in trading with 3 Bitcoin – of which 2 BTCs have borrowed, which also means that Profit or loss will increase 3 times, depending on the trade.
Who can use Escrow?
Coinbase notes this feature is open to retail and institutional traders. However, the exchange restricted the participation of retail customers in 23 states. Retail customers must also have a regular operating history on the platform to be eligible to receive deposits.
On the institutional level, the margin feature will be available in 43 states and 9 other countries.
Why did Coinbase Pro remove margin many years ago?
Coinbase Pro was rebranded from GDAX in 2018, Coinbase's trading platform introduced 3x margin trading for Bitcoin, Litecoin and Ethereum in 2017, as shown in a tweet instructions from the company.
However, a few months later, the platform removed the margin feature after the Ethereum flash crash in June 2017 – the event that caused the ETH price to drop $ 317 to $ 0.1 in seconds. The Commodity Futures Trading Commission (CFTC) also investigated the exchange after this incident.
When asked why the exchange removed the feature, a Coinbase spokesman said:
“A few years ago, we introduced another margin feature, but we finally decided to remove it because it was not the right experience. Since then, Since then, we've been thinking about experiencing from the first principles and building what we believe to be a special user experience, powerful enough to scale for large organizational users. at the same time providing a great experience for retail users. ”
Maybe you are interested:
Join our channel to stay up to date on the most useful news and knowledge at:
According to CoinTelegraph
Translated by ToiYeuBitcoin