Bitpanda, the UK-registered crypto platform, has launched margin trading for UK retail investors, allowing traders to gain three times leveraged exposure on 120 cryptoassets.
This means that cryptocurrency traders can access up to 3x leverage on supported cryptoassets. According to Bitpanda, the product includes real-time monitoring, margin alerts and risk management tools designed to help traders manage leveraged positions.
How does leverage trading on Bitpanda work?
Unlike traditional crypto derivatives trading, Bitpanda’s margin product works by borrowing stablecoins from the platform to increase a trader’s buying power.
When opening a margin position, the trader commits their own crypto as the initial investment. Bitpanda then lends additional funds, typically a stablecoin, which is combined with the trader’s capital to purchase the chosen crypto asset.
For example, if a trader has £1,000 and uses 3x leverage, Bitpanda effectively lends an additional £2,000 worth of stablecoin so the trader can buy £3,000 of crypto. If the asset rises in value, the gains are magnified relative to the trader’s initial investment. However, losses are also amplified if the price falls.
The purchased cryptoassets are held as collateral for the loan. If the value of the position falls too far, the platform can automatically liquidate the assets to repay the borrowed amount and protect the lender.
The platform also includes negative balance protection, meaning traders cannot lose more than the funds they initially commit to the margin position.
Long-only exposure
One key limitation of the product is that it does not allow traders to short Bitcoin or other cryptocurrencies.
According to Bitpanda’s margin trading terms, the service provides long-only leveraged exposure, meaning traders can only speculate on prices rising. Short selling or inverse exposure, profiting on prices falling, is not available.
That structure is likely one of the reasons the product can be offered to UK retail clients, as it avoids the derivatives-style features that regulators have previously banned.
Bitpanda says the new margin feature is designed to increase engagement among active traders, but the company still warns that leveraged crypto trading carries significant risk and is best suited to experienced investors.
Margin trading involves borrowing crypto assets to amplify potential gains and losses. Even small price changes can lead to margin calls or liquidation, potentially resulting in the loss of your entire capital. Borrowing fees accrue every 4 hours and adversely affect your margin level. Margin trading is for experienced traders only. Ensure you understand the risks and can bear substantial or total financial loss. Never trade with money you cannot afford to lose.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.
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