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- Exchange of cryptocurrency derivatives FTX has chosen to limit the amount of leverage accessible to its members in order to reduce hazardous trading
- Many novice traders have become permabears on Bitcoin and crypto, according to Twitter user Crypto Tolkien, after losing their shirt in their first transactions due to high leverage
- On July 20, it was announced that FTX has set a new record for the most money raised in a crypto fundraising round.
Exchange of cryptocurrency derivatives FTX has chosen to limit the amount of leverage accessible to its members in order to reduce hazardous trading. The exchange, which was established by crypto millionaire Sam Bankman-Fried (SBF), has decreased the highest leverage offered on the site to 20x, down from 101x previously.
Bankman-Fried said the decision was taken in light of the exchange’s attempts to promote prudent trading in a tweet announcing the new leverage limits on July 25. He said that leveraged trading does not account for a substantial portion of the exchange’s overall volumes, estimating that the typical open margin position on FTX is leveraged by about 2x. This will only affect a small portion of the platform’s activity, and while many users have indicated an interest in having the choice, relatively few would utilize it.
The response from the crypto community was overwhelmingly favourable, with many commentators emphasising the dangers of excessive leverage. Many novice traders have become permabears on Bitcoin and crypto, according to Twitter user Crypto Tolkien, after losing their shirt in their first transactions due to high leverage. Others, on the other hand, felt that 20x was still a lot of leverage, and that the limitations should be decreased even further. FTX is the 13th-largest exchange by volume..
The daily volume on FTX is almost $1.5 billion as of this writing, with volume up 41% in the last 24 hours as Bitcoin surged more than 10%. Huobi Global imposed some of its own limitations restricting margin trading for new and current customers on June 16. Huobi reduced its permissible leverage from 125x to less than 5x, citing worries about increasing regulation in China.
Global regulators appear to be increasingly targeting unlicensed crypto platforms, prompting the leverage cutbacks. Following an assessment of Binance’s operations, the Financial Conduct Authority of the United Kingdom ordered it to halt all regulated activity in the nation in late June. Following this, a number of high-street banks prohibited their clients from transacting with the exchange. Financial authorities on the other side of the Atlantic have been harsh on crypto loan business BlockFi, with the Texas State Securities Board accusing the company of selling unregistered securities on July 22.
On July 20, it was announced that FTX has set a new record for the most money raised in a crypto fundraising round. Over 60 people participated in the Series B investment round, which netted the exchange $900 million and raised its valuation to $18 billion.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
