BitMEX CEO: Traders Are not Maximizing the 100X Leverage Option

New Crypto Options BitMEX Arthur Hayes To Open a New Platform

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BitMEX, a popular crypto exchange platform, offers a staggering 100x leverage to its customers. However, a recent blog post published on Wednesday shows that the exchange’s users are not too keen on maximizing this option. Per the post, BitMEX’s CEO and co-founder Arthur Hayes made this revelation at the end of the research conducted on the usage of leverage. The examination focused on the average use rate of leverage on the Bitcoin-USD (BTC/USD) perpetual swap option.

In the post, Hayes reported that for the month of May, BitMEX traders proved to be “responsible,” claiming that they have opted to refrain from using the full leverage offered by the company. The research revealed that in May most of BitMEX users were fond of holding about 29x on long positions, while the short positions were usually held on 26x leverage.

Hayes went on to reveal that the same contract in April saw an average of 22x leverage on long positions, while short positions were averagely held at 30x. It claimed that about 8 percent of the long positions held in the past year has seen no more than 54x leverage, while only 20 percent of the short positions held more than 47x leverage.

From a trader’s standpoint, it’s pretty easy to see why these statistics so reflect. Using 100x leverage means that you can buy 1 Bitcoin (BTC) token in a single trade, even if all you have is 0.01 BTC. In essence, it’s almost like taking a loan from the exchange so you can trade.

Just like every form of trading, there are huge opportunities and risks with trading on high leverage- even if it’s not up to 100x. A trade going good can net you a killing, while a single bad trade will undoubtedly put you in a colossal financial hole that you might not be able to get out from.

Given the recent price volatility of Bitcoin and the incredibly dire state that the entire crypto market has faced over the course of the past year (which, by the way, is when the BitMEX report’s statistics began), it isn’t difficult to see why traders would prefer to work on the safe side.  

Things could change, however. Bitcoin (the only currency with which you can trade and withdraw your earnings on BitMEX) has been steadily rising over the past few days, holding strong above the $5,000 mark for the past few weeks. If this stability holds, it’s definitely not too far-fetched to assume that traders would begin opting for high leverage positions.

Remember, all trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

About Jimmy Aki

Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.