The co-founder and CEO of BitMex, Arthur Hayes has revealed that while traders can use up to 100x leverage on XBTUSD, the average long and shorts leverage in April was 22x and 30x, respectively.
Traders are Cautious
BitMex is a Bitcoin trading platform that allows users to stake up to 100x leverage on the products. While it terms itself as the most advanced trading platform, BitMex enables users to trade without an expiry date. That is, their futures are perpetual.
However, despite the high leverage available to traders, most of them are playing it safe. According to the CEO of the trading platform, traders are using small leverages for both their long and short positions. He tweeted that “In April 2019 looking at the XBTUSD perp, longs and shorts used an average effective leverage of 22x and 30x respectively.”
While explaining the scenario in their blog post, BitMex pointed out that Bitcoin traders are acting responsibly in that they do not on average use the maximum amount of leverage. For long positions, the average is 22X while that of short positions 30x. Thus, both figures are below the 50x mark.
A look at the table provided by BitMex in their blog post, it shows that the numbers have never been above 50X over the past year. For long positions, the highest average was recorded in January this year (39) while March 2019 has the highest (37) for shorts.
The numbers for April show that there has been an increase in leverage at a time when the cryptocurrency market is highly volatile. Most traders are now betting on the price of Bitcoin rather than actually trading it. According to some crypto enthusiasts, this is an exciting development as they believe that the leverage is high.
While Arthur Hayes might be encouraging traders to go higher on their leverage, some of them believe that it is too high considering the current state of the market.
BitMex Gains from BTC Price Rally
The price of the leading cryptocurrency has been on the rise since the start of the year. So far, the Bitcoin price is up by 115 percent year-to-date. As a result of this parabolic rise of Bitcoin prices, some exchanges are printing massive trading volumes, and BitMex has not been left behind.
The margin trading platform recorded its all-time high of $10 billion of Bitcoin (BTC) traded volumes a few days back. Despite the dip, BitMex volumes are up and on average stands at $8 billion.
Vijay Boyapati praised the business model of BitMex. The cryptocurrency analyst tweeted that “The effort is worth it, however. @BitMEXdotcom has already proven the size of the market with the Bitcoin collateralized derivative products they offer.”
Another popular cryptocurrency figure mentioned that BitMex hitting a $10 billion daily trading volume is great news for the crypto space. In his tweet, he stated that “Exciting week for crypto [so far]: 1. Bakkt to test futures market in July. 2. GBTC hits $1.7 billion AUM. 3. Microsoft launches a product on Bitcoin blockchain. 4. Wholefoods accept crypto payments. 5. Real 10 volume of bitcoin hits $2.6 billion. 6. BitMEX records $10 billion in 1 day”
While the prices of Bitcoin and other cryptocurrencies continue to increase, traders are taking more risk by leveraging higher on their price predictions.