Binance limits futures leverage to just 20x

Cryptocurrency exchange Binance halts iDeal payments

The world’s largest cryptocurrency exchange decides to significantly reduce its leverage. This may be in response to the regulatory problems it has been experiencing recently.

The move from FTX

Initially, the new restrictions were applied by the FTX exchange. The maximum leverage there was 100x. For the sake of consumer protection, the platform decided to reduce the allowable leverage to 20x. The leader of the exchange Sam Bankman-Fried informed via his Twitter account that the average leverage used by FTX users is 2x, so the changes will not be so severe and will affect a relatively small percentage of users.

Binance’s response

FTX has decided to follow the lead of Binance. The announcement in this matter, also via Twitter, was made by the CEO of the exchange Changpeng Zhao (CZ). He informed his followers that from Monday, July 19 the restrictions for new users have come into force, for which the maximum leverage will now be 20x. Previously, it was as high as 125x. Importantly, in the coming weeks, all traders trading on Binance Futures are to be subject to the same regulations.

While the news about FTX did not make such a big impression on the market, the information about Binance did. It is worth recalling that Binance is the platform with the largest volume of cryptocurrency trading. In addition, it faces increasing regulatory problems in many countries and administrative regions of the world. It is speculated that the reduction of leverage is one of the forms of yielding to the pressure of regulators. This may be justified especially since CZ has made it clear that it did not want to introduce such a restriction at all.

Adding fuel to the fire is the fact that shortly afterwards another announcement appeared indicating that withdrawals from Binance for unverified users (without KYC) will be limited from 2 BTC to 0.06 BTC per day.

Leveraged trading and the risks associated with it

Leveraged trades are very popular. We discussed their characteristics in the article under the title “Leveraged trading”. If you are interested in such solutions, be sure to take a look to learn more about them.

Keep in mind, however, that trading on the basis of this derivative instrument is fraught with extremely high risk. The higher the leverage you decide to use, the higher the risk. Therefore, there are limitations. This type of instrument is very often used by new, inexperienced stock market users who wish to get rich in a flash. As you know, using the maximum leverage so far available on Binance, 125x, is a potentially huge profit. But a change in the price of the cryptocurrency by 0.8%, in a different direction than the investor anticipated, will result in complete deprivation of his funds. Considering the level of volatility of crypto assets, as well as the failure rate of exchanges, the potential risk is at an above-average level.

Disclaimer: Blockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email

More News

All articles loaded
No more articles to load

Knowledge Base

Terra (LUNA)

What is Terra (LUNA)?

This time we take a look at another project that dived deep into the hearts of investors. What exactly is…

What is Avalanche (AVAX)?

Avalanche (AVAX) is a blockchain, which conquers the hearts of programmers and at the same time is a great bargain…

What is Sandbox (SAND)?

In this material, we take a look at one of the fastest growing spaces in the metaverse family. We are…
All articles loaded
No more articles to load

Analyses

All articles loaded
No more articles to load

Knowledge Base

What is Terra (LUNA)?

This time we take a look at another project that dived deep into the hearts of investors. What exactly is Terra (LUNA)? Blockchain Terra (LUNA)…

What is Avalanche (AVAX)?

Avalanche (AVAX) is a blockchain, which conquers the hearts of programmers and at the same time is a great bargain for investors. What distinguishes the…

What are stablecoins and how can you use them?

In recent years, cryptocurrencies are experiencing a real “boom”! And not just for cryptocurrencies – the rise in popularity applies to blockchain technology in general.…

What is Sandbox (SAND)?

In this material, we take a look at one of the fastest growing spaces in the metaverse family. We are talking about Sandbox and SAND…

What is Polygon (MATIC)?

Another coin worth looking at is Polygon (MATIC). It is especially liked by many investors. So what makes its popularity constantly growing? Support for Ethereum…

What is Shiba Inu (SHIB)

Shiba Inu (SHIB) is one of the most sought-after coins on the market. This is evidenced by its dynamic rallies and global interest. But does…
All articles loaded
No more articles to load