Bitfinex Starts Margin Trading for 0x

Crypto exchange Bitfinex announced that it allowed lending and margin trading for 0x (ZRX). The token was listed on Bitfinex in January this year. The token is traded in pairs with bitcoin, ethereum, and the U.S. dollar.

Bitfinex currently provides 3.33x leverage to users who margin trade. This means that a deposit of $1,000 will enable a $3,333.33 leveraged trading amount to users. In August last year, the platform announced the launch of (Bitcoin.Cash) (BCH) margin trading. Thus, the exchange was the first to offer a similar option to traders.

Margin trading allows traders to get a higher profit. True, the risks also increase several times. Exchanges allow customers to borrow money to trade in larger amounts of crypto assets than they can afford with their funds. In the case of an asset price moving in the right direction, the profit becomes much greater than if traders used only the funds they have. However, if the traders failed to guess the forecast, then the losses can have enormous consequences for their accounts.

The cryptocurrency market is characterized by increased volatility, so the risk of traders in margin trading is much higher, especially given frequent failures in the platforms when traders cannot close their positions at the right time. In addition, platforms that provide such an opportunity are subject to stronger and sharper movements due to periodic margin calls. If traders buy cryptocurrency only for the amount of their own funds, then if even a 99.9% drop in price will not force them to close positions. As a result, the players can wait for the restoration of the price as long as desired. But if the traders bought the cryptocurrency using borrowed funds as well, then when the price moves in the wrong direction, a moment of forced price closing may come very soon (margin call).

Users transfer funds to each other directly through the interface of the exchange itself. There are no fixed rates for lending with fiat money or cryptocurrency. The demand and supply for a loan of an instrument are formed within a moment. Usually, it leads to strong changes in the cost of lending. For example, with the rapid growth of the market, the cost of lending in dollars rises sharply. When the market falls, the cost of lending in cryptocurrencies increases, since the demand for them goes up due to the increase in the number of short positions.

It should be noted that Bitfinex customers may be interested in the new option, as the cost of the ZRX has been gradually increasing from mid-September. On October 16, Coinbase announced the start of support for the token 0x. The company's customers can work with the asset in pairs with bitcoin (Bitcoin), bitcoin cash (Bitcoin.Cash) , ethereum (ETH/USD), ethereum classic (ETC/USD), and litecoin (LTC/USD). This news has a positive effect on the cost of the token 0x. Earlier, Coinbase Pro added support for ZRX. On this site, the asset is trading in pairs with the U.S. dollar, euro, and bitcoin.