search newsletter login upgrade

Bitfinex says its 100x margin derivatives product is ‘ready for prime time’

by Yogita Khatri

June 25, 2019, 12:30PM EDT  ·  2 min read

Quick Take

  • Bitfinex CTO Paolo Ardoino told The Block that the exchange is ready to ship a derivatives product with up to 100x leverage
  • It currently offers leverage of up to 3.3x as part of its margin trading offering

by Yogita Khatri

June 25, 2019, 12:30PM EDT  ·  2 min read

Cryptocurrency exchange Bitfinex is ready to ship a derivatives product with up to 100 times leverage, CTO Paolo Ardoino told The Block.

The product has been in the works and is “now ready for prime time,” he said. It had been expected to go live this month, according to a whitepaper Bitfinex published last month for its $1 billion private token sale of LEO tokens.

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet,” the whitepaper stated, adding that the product will have “USDt-based collateral (unavailable in the rest of the market), up to 100x leverage.”

Leverage is a trading strategy of using borrowed money to increase the potential return of an investment, but it also comes with higher risks. Ardoino confirmed to The Block that “only verified” customers will be allowed to use its perpetual swap product.

“It will be an optional instrument, no change to our current margin offering,” Ardoino tweeted Monday. Bitfinex currently offers leverage of up to 3.3x as part of its margin trading offering.

Cryptocurrency derivatives exchange BitMEX also offers a similar product with up to 100x leverage on its Bitcoin perpetual swap contract. Still, Bitfinex says its product will serve as a hedging tool for its clients, rather than a gambling mechanism. 

“There’s nothing wrong inherently about 100x,” Max Boonen, CEO of trading firm B2C2. “But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically.”

“They don’t want to go balls to the wall.”

The cryptocurrency market has been seeing an increasing number of derivatives offerings. Last week, The Block reported that Mike Novogratz’s cryptocurrency merchant bank, Galaxy Digital, has expanded its trading business to offer cryptocurrency options contracts amid rising demand from institutional investors.

Cryptocurrency exchange Binance was also looking to launch futures trading, among others. “Futures liquidity has been centralized on BitMEX and Deribit. Interesting to see if Binance can steal some of that flow… not sure how easy it will be to take some of that away from BitMEX,” Darius Sit, managing partner at crypto trading firm QCP Capital told The Block at the time.

Binance, in fact, seems to be ready to ship its product too. Its CEO Changpeng Zhao tweeted on Sunday that the exchange had its “first Margin liquidation” and that “it was on a #BTC short.”