Coinbase Revives Margin Trading! Coinbase revives margin trading with a fairly conservative 3x leverage, joining an ever-growing list of exchanges that already offer leverage training.
The US Based exchange announced the revival of its Margin Trading abilities in a blog post yesterday. The feature is available for individual investors in 23 US states. Leverage options are also available to institutional traders in 44 states and 9 countries.
Coinbase previously offered leverage trading back in 2017 at 3x – it was later suspended in the same year. Executives had been giving hints that the feature would come back since early 2019.
This push for leverage trading has returned since some of the world’s most popular crypto exchanges have already started to offer leverage trading in order to attract customers and transaction volume.
Non-US based exchanges like Binance, BitMEX, and Deribit offer 100x leverage on futures contracts and other derivatives, but usually restrict American customers from accessing those features. US traders can get leverage to buy BTC futures contracts on the CME and Bakkt.
Leverage is considered risky in trading because, while it boosts the potential gains, it simultaneously exposes a trader to losses. Coinbase’s 3x leverage options limit the amount of risk to just 3x.
Traders on Coinbase could put down $100 and borrow up to $200 of bitcoin from the exchange for trading. If Bitcoin climbs 33%, traders would double their original investment to $200.00, but if it falls by 33%, the trade is liquidated and the trader loses 100.00, their original investment.
Coinbase also said the following:
“If deployed as part of a responsible trading strategy, margin trading doesn’t just increase your position in a specific trade but can also help diversify your portfolio, allowing you to h edge or arbitrage across multiple positions without depositing additional capital.”
Coinbase is notable insofar as it being one of the few big cryptocurrency exchanges based in the US, adhering to the nation’s strict regulations, and still offering leverage trading. Since the early years of cryptocurrency, Coinbase has been the choice for new traders to “on-ramp” into crypto using fiat. The company states that they have more than 30 million users.
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