2018-12-23 21:39 |
From the 21st of December 2018, users of Bitfinex can now access margin trading for the USDT/USD pair. The exchange made the announcement yesterday in a bid to improve its stablecoin offering in line with market evolution and consumer demand.
Why Margin Trading for USDT/USDThe team at the exchange went on to explain why they decided to start offering margin trading on the USDT/USD pair.
Adding margin trading on USDT/USD pair will not only allow for more efficient price discovery, but in an important move for risk management, unlock the ability to hedge the exposure taken on stablecoins. Along with a dedicated lending market, USDT will be available as collateral for margin positions.
Plans to Introduce Margin Trading for Other Major StablecoinsBitfinex also added that as part of their commitment of providing a coin agnostic platform, they will be launching margin trading for other major stablecoin pairings when sufficient liquidity is reached.
What is Margin Trading?Margin trading refers to the practice of using borrowed funds from a broker to trade a financial asset, which forms the collateral for the loan from the broker. In the case of Bitfinex, a trader can borrow as much as 3.33 times the value of the trade. More on margin trading on Bitfinex can be found here.
How Tether Can Sometimes Deviate from the $1 PegFurther looking at the price history of Tether, we find that the stablecoin has on several occasions deviated from the $1 mark. The most recent deviation was when rumors broke that Binance was delisting Tether (USDT) due to insolvency issues being faced by the bank Tether Limited was using at the time.
Tether would later open a bank account in the Bahamas with Deltec Bank and Trust Limited. The bank has since confirmed Tether’s account balance. Bloomberg has also issued a report stating that the firm does indeed have the funds to back up the digital asset.
The screenshot of the variance in value of USDT during the time period of the fake news with Binance can be found below. We can see that USDT deviated from the $1 mark by as much as 5%.
What are your thoughts on Bitfinex launching margin trading for USDT/USD? Please let us know in the comment section below.
Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.
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