FTX removes high leverage from its platform

Karthik Subramanian

FTX, one of the fastest-growing crypto exchanges in the world, has announced that it would be reducing the maximum leverage that it allows for traders on its platform, and henceforth, the maximum leverage would be only 20x.

ftx

The exchange had been allowing leverage of up to 100x so far but based on certain conditions like higher fees and specific instruments etc but now it has chosen to remove any such leverage and has decided to switch to lower leverage in order to make trading ‘safer’ on its platform.

FTX has justified this move saying that the trades that happen on its platform with higher leverage are less than 1% of the total volume at the exchange and that the average leverage used at the exchange is only around 2x which is a bit of a surprise considering that it is home to a very large number of retail traders who are likely to prefer higher leverage for their trades.

The company believes that the entire industry is likely to move towards lower leverage in the coming months as this would make the trading ecosystem much safer for traders, less liquidations and also put less strain on the margin handling that the exchanges would need to do. FTX has also said that it would be introducing more apps and features in the coming months.

FTX had recently raised close to a billion dollars in what was seen as the highest equity raise in the crypto industry so far. It has been expanding its business globally and has also been expanding its business outside the exchange ecosystem. It has been planning to enter into the payments industry and recently also seems to be expanding into the NFT ecosystem to make full use of the currency craze in the crypto ecosystem.

By moving to reduce the leverage used on trades, FTX hopes to be the first mover as other exchanges may also start following suit in due course of time. As institutions enter into the crypto space, they are likely to be very averse to large volatility and even bigger liquidations. They are likely to favor more stable conditions and prices which would mean that the leverage that each trader has, needs to be controlled. Large leverages tend to lead to risky trades which are likely to keep the market very volatile. In order to slow down the market, controlling the leverage would be key. Though large leverages are given in the FX market, it is much bigger than crypto at this point in time and so the retail trading in the FX space doesn’t affect the overall ecosystem too much.

Read this next

Industry News

Limitless Opportunities Await at iFX EXPO International 2024!

The countdown is on until iFX EXPO International 2024 officially gets underway. Explore the wealth of networking opportunities and business potential on offer in Limassol, Cyprus.

Market News

Elon Musk Drives NVDA Price to a New High

On Tuesday, Nvidia’s stock price hit an all-time high, exceeding $1,130, marking a nearly 7% rise from Monday’s closing price.

Retail FX

Cerus Markets launches MT5 with exclusive Crypto vs TradFi offering

“The introduction of MT5 is a significant milestone for Cerus Markets and our valued clients. We are constantly seeking ways to enrich our platform and empower our traders with more advanced tools and opportunities. MT5 aligns perfectly with our mission to bridge the gap between cryptocurrency and traditional financial markets.”

Fintech

Ouinex taps Netdania to build institutional-grade crypto trading platform

Ouinex intends to always bring the best of TradFi electronic trading infrastructure to Web3 including innovative universal cross-margining capabilities so that users can trade TradeFi instruments by using their crypto holdings as margin.

Retail FX

BDSwiss Elevates Traders’ Experience with Advanced Trading Tools

In the fast-paced world of financial markets, having access to advanced trading tools and educational resources is crucial for traders aiming to stay ahead of the curve.

Market News

Gold & Silver rally, made in China

Gold prices correlate with the US bond market, and the US Dollar influences the Gold/Silver ratio. Chinese market premiums for Gold and Silver suggest continued uptrends. Inflation-adjusted peaks indicate current prices are not overly expensive, implying potential for further gains.

Market News

Japan’s Monetary Policy and FX Intervention: Key Takeaways from the G20 Meeting

At the G20, BoJ President Kanda and Finance Minister Suzuki emphasized stable exchange rates and cautious FX intervention, signaling imminent action. Softer US inflation data and potential BoJ rate hikes are impacting USD/JPY

blockdag

Top 3 Cryptos of 2024: BlockDAG’s $1 Prediction, Immutable’s Remarkable Price Increase, and Solana’s Promising Future

Explore pivotal changes in the cryptocurrency market through our analysis of Solana, Immutable, and BlockDAG. Explore how BlockDAG raised $34.7M in its presale with advanced technologies.

Fintech

UK bank Kroo bans crypto transactions, warns account closure

London-based digital bank Kroo has imposed a ban on cryptocurrency transactions, another blow for crypto traders ‎who recently saw a sizable number of banks deciding not to ‎finance the wobbly asset class.‎

<