Indian exchange Bitbns has introduced a lot of new changes to its margin trading platform. With 28 cryptocurrencies now available for margin trading, it has become the most robust platform for margin trading in India. Margin trading essentially allows you to trade using leverage and increase chances to maximise your profits. Bitbns had launched margin trading in April this year.
Apart from more cryptocurrency options, borrowers and lenders using the platform can set their own interest rate, unlike earlier where it was pre-decided by the exchange. This should foster more competition and bring more competitive rates for margin borrowers. Apart from this, borrowers can now take a margin loan against their entire net worth (cryptocurrency amount in INR+INR wallet amount) even for cryptocurrencies they do not hold on their wallets. Earlier, Bitbns had restricted margin loans only to the cryptocurrencies available with the borrowers. The new changes will definitely provide borrowers more flexibility by giving them the option of taking a margin loan for any cryptocurrency available on the platform.
However, the maximum value of the margin loan cannot exceed the net-worth of the borrowers. Bitbns has pre-defined the minimum value of margin loan for each cryptocurrency. The exchange has also introduced an open order book in the margin trading window to provide greater visibility into the market. All withdrawals and trading will be temporarily paused while placing the borrow order till the time the order is executed or cancelled. As far as the allocation is concerned, the margin loan sanctioned will be dependent on the dynamics of the different cryptocurrencies. Theoretically, a borrower could get a margin loan up to his/her entire net worth, but generally it may be slightly lesser than that amount. The margin loan amount (expressed in INR) would then be calculated with the current price of the crypto asset to give the margin loan in the required cryptocurrency.A partially fulfilled margin borrow request will be cancelled automatically cancelled after 15 minutes.
Lenders can use the platform to earn interest on the cryptocurrencies they hold on their wallets. While they are free to set the interest rate under the new changes, 15% of the profit will be deducted by Bitbns as commission. Also, Borrowers will have to complete their settlements (principal+interest) in the same cryptocurrency they borrowed on margin. Bitbns holds the right to liquidate borrower assets, if borrowers lose 80% of the margin loan availed or if the net worth of the individual falls below the amount required to settle the funds. This is done to fairly settle the loan with lenders. Borrowers have the option to reload their INR or crypto wallets to get out of the liquidate zone. If users don’t return their margin loan on time, the interest will keep accruing on the amount and withdrawals will be paused for the entire duration.
While margin trading is a good way to maximise profits, we recommend that users take extreme caution while trading on leverage. It is just as simple to make double the amount of losses as it is to make more profits. Employ margin trading only if you are a skilled trader and have the stomach to lose money if something goes wrong with your prediction of the cryptocurrency market.