Coinbase to Introduce Margin Trading? Should Binance, BitMEX be Worried…
In an interview by The Block, Emilie Choi, the vice president of Business, Data, and International at Coinbase, spoke on several topics concerning the activity of Coinbase going forward. The interview saw Emilie Choi hint at a possible venture into margin trading by Coinbase given its recent rise in the cryptocurrency market. She also mentions the importance of maintaining Coinbase’s status as the bridge between crypto and fiat trading in the decentralized exchange market.
Taking Cue from Centralized Markets
The cryptocurrency markets are borrowing several features from traditional markets. This makes them familiar and more appealing to those who are yet to embrace cryptocurrency and cryptocurrency trading.
From the interview, Choi makes it almost sure that margin trading will be part of the future of Coinbase. She states:
“Margin lend borrow is going to be a next big step for us, especially on the active trader side. The clear demand for that…”
However, when asked about futures and options, she voices her reservations citing unclear regulations which will likely delay any plans or implementation of futures and options.
Margin trading has risen in popularity in the decentralized exchange space. The risks associated with it are high; however, when understood, traders can make consistent profits.
Unlike the centralized exchange space, the decentralized exchange space is still growing. There is always a lot to be discussed before decentralized exchanges become as functionally efficient as centralized ones.
Competition is stiff in the decentralized exchange market, which is great for traders. Binance recently announced that they are offering margin trading. This adds to their list of already popular features.
Trading pairs have already been listed according to some screenshots from Twitter. It also appears that the features are still beta and not yet open to the public.
Is the King Safe?
BitMEX is the most popular trading platform for margin trading.
It is home to the ‘mex junkies’ and the land of ‘rektness.’
Annual statistics, as quoted by Cryptopotato, show that the notional trading volume for BitMEX was $1 trillion with an average of 8.6x leverage per trade! Statistics from SimilarWeb also show that BitMEX receives millions of visitors per day on their platform.
With such figures, BitMEX seems to be in its category in the decentralized exchange market. However, Binance, Coinbase, and other exchange have been gaining in terms of trading volume as they increase their features and services. The recent addition of margin trading is likely to rock the trading volume of BitMEX as traders try out other available options in the market.
BitMEX will continue to lead in terms of the trading volume. However, its volume will likely decrease and, without any innovation, it may find itself trailing in the not so distant future.
Following Binance’s annoucnement that they will be introducing margin trading, many in the community reacted with excitment, and combined with BitMEX;s continued success, it’s clear that margin trading has a strongappeal to a large section of the crypto trading community.
Binance finally introducing margin trading is the greatest fucking thing ever.
— 𝓡𝓪𝓶𝓹𝓪𝓰𝓮 🦍 (@Thrillmex) May 24, 2019
With its philosophy of bridging the gap between crypto and fiat, Coinbase is likely to gain more traders from BitMEX when it releases its margin trading option. It only needs to deliver a margin trading service that is more convenient compared to BitMEXs platform.
The decentralized exchange market still has a long way to go. However, the improvements made during the growing period are being welcomed by traders.