Margin trading has become increasingly popular in the Bitcoin world. People enjoy speculating on the future Bitcoin price direction, for obvious reason. Bibox is the latest exchange to offer this type of functionality. An interesting decision, even though this is not one of the larger exchanges by any means.
It is good to see smaller trading platforms evolve over time. For Bibox, adding margin trading seems to be the right call. With more platforms focusing on financial derivatives transactions, new opportunities can be explored. Users of this platform will need a dedicated margin trading account before they can take advantage of this new offering.
A Smart Decision by Bibox
With this new option. Bibox users can open leveraged trading position. Doing so always carries systemic risks where these volatile markets are concerned. Even so, it is a worthwhile opportunity to make some quick money without buying additional cryptocurrencies. For now, the functionality is limited to Bitcoin only.
The leverage ratio provided by Bibox is limited at factor three. Compared to other exchanges, that is relatively low. This option does include borrowing BTC from the market, which can be used in full for margin trading. Borrowers can repay the loan ahead of schedule, but lenders cannot recall the loan in advance.
The big question is how forced liquidation will come into the picture. If other platforms are any indication, some users will get liquidated at some point. The volatility of Bitcoin has been well-documented. Bibox uses the price index weighted according to information from five different platforms, including CoinCap, Binance, and Bibox itself.
Header image courtesy of Shutterstock
