Japan’s Financial Services Agency limiting caps on Crypto Margin Trading?

Japan’s regulators are considering stricter limits on margin trading of digital currency as reported by Nikkei. To curb speculative trading and limit user exposure to volatility risks, Japan’s Financial Services Agency is considering leverage caps for margin trading of cryptocurrencies.

The push to regulate came in response to concerns by many users. With a theft with Coincheck early this year FSA received a lot of inquiries, and this move is just to reduce risks and improve user protection.

Read more at Asia.nikkei.

How Crypto Wallets Play a Vital Role in Crypto Margin Trading

Crypto Wallets are the essential part of crypto margin trading. These crypto wallets are provided by the crypto exchanges are used for trading leveraged short and long positions and for providing margin funding/financing to other traders. The funds are instantly transferred from one wallet to another assisting is a smooth trade. So what else does the crypto wallet help with, the Margin Traders? Let’s explore about Crypto Wallets and their place in Crypto Margin Trading

What are Crypto Wallets and How it works?

A cryptocurrency wallet or Crypto wallets is a software program that stores the public and private keys, interacting with different blockchain to allow individuals to send and receive digital currency and view their balance. If you are keen to use any digital currency, one of the prerequisites is to have a crypto wallet or digital wallet.

The working of cryptocurrency wallet cannot be compared to a physical wallet. The crypto wallets do not store currency, unlike the wallet you carry in your pocket. When an individual sends a digital currency to say ETH, he is actually signing off his ownership from that coin and assigning new ownership address of yours. To access these coins and spend it or use it for crypto trading the private key that is assigned to you should match the public key available for ETH. Once the match is made, the account balance would increase and that for the sender would decrease. There is no real exchange of coins, only a transaction record on the Ethereum blockchain and a change in account balance of the sender and receiver.

Crypto Wallets in Crypto Margin Trading

In the market, many types of crypto wallets available are categorized as Software[subtype – Desktop, mobile and online], Hardware, Paper wallets. Each of them differs in a way they are accessed and utilized.

But the most crucial categorization of wallets for margin traders is Hot wallets and Cold storage. This could be applied to any crypto wallet. Both of the strategies are a measure of tightening the security by exchanges to safeguard funds from hackers. Both cold storage and the hot wallet are security measures put in place by exchange platforms to safeguard user funds from any mishap.

Cold storage wallets are wallets that are offline most of the time and can be accessed only when the user wants to make a transaction, putting away the risk of being hacked. Example of a Cold storage wallet would be Hardware wallet that is accessed via USB drive and can be put on offline mode easily. Crypto Margin Traders could use this Cold storage when making a margin trade. It not only helps the funder/lender but even the trader to put his collateral in a secure way.

Hot Wallets, on the other hand, refer to “liquidity in hand” by exchanges in case there is a sudden request of withdrawals. Just imagine a bank in your neighborhood keeping “cash handy” for withdrawals. Example of hot wallets would be an online wallet or desktop wallet. So for Margin trading in case, a margin call is made, and the borrower is not able to fulfil or top-up his wallet, the exchange would release the collateral from the hot wallet to the lender.

While the experts recommend usage of Cold Storage, hot wallets are still to be used whenever the need arises. Would you like to share your crypto wallet story with us? Please post on to our twitter account

References

Dummies, blockgeeks.

Trading Bots – Could they help in Crypto Margin Trading?

Most of the crypto Traders look for passive income owing to the nature of the market. The market shifts are so random and quick that an investor could lose all his money if he did not act on time, that’s where Trading bots come handy and have been evolving in functionality and sophistication. Our post of today would talk about the trading bots and their role in Crypto Margin Trading. Let’s get started –

What are Trading Bots?

Just as Algorithmic Trading is used by the buy-side in equity, currency or commodity markets, Trading bots that first appeared in FX or foreign exchange market, are now making their way into the cryptosphere.

A Trading Bot is nothing but a piece of code or software or a computer program that takes various indicators as inputs, analyzes the trends and market sentiments, and automatically executes your orders. Bots are a unique form of Artificial Intelligence or AI that answers your queries, shares information, perform actions and you may even not now it’s a computer program.

Bots are designed to improve over time, based on their past decisions and results they have the intelligence to refine themselves and provide precise answers/appropriate action.

Rewards of Trading Bots

One of the primary advantages of Bots is the reason for their evolution. They came into existence to make quick and precise decisions. We all are well aware of the fact that crypto world never sleeps and even a light rain shower could move the candlestick up or down, so irrespective of whether the trader is active or passive he needs to be watchful and be alert and active 24*7 is humanly impossible, then why not ask a piece of code to work for us.

Bots are the “trader” that knows the necessary data, patterns and exactly when to trade — and when not to.

Risks of Trading Bots

While Trading Bots help you to analyze patterns and get insights to indicators, they do not help you to choose trades. Which trade to pick is something you as an experienced trader need to learn yourself. So, it comes with a risk of what if you chose a wrong trade and the bot would only take it a step further may be towards gain or loss.

Another disadvantage that is associated with Trading bots is given the nature of the market; the program is yet not mature to know all the combination and probabilities of an event happening and make a decision that shows a gain. The technology is evolving, and so they need to have a working knowledge of how the market works to make the right decisions.

Trading Bots assisting in Margin Trading?

There are many Trading bots available on crypto traders to assist with Crypto Margin Trading, and each has their own distinctive features. Listing down few of them based on the popularity [ Please use these strategies at your own risk]

Optibot Margin

A premium strategy can be used at Bitfinex and Poloniex follows early trends rather than predicting the future. The bot will buy when the market is gaining momentum and sell when it’s dropping. You can know about its features and uses here.

 

Wave Trader Margin

Another premium strategy that can be used at Kraken, Bitfinex, and Poloniex is a trend bot that has built-in safe scalping. For the novice, it can be run on default settings with minimal effort. The strategies have been tuned across many coins and exchanges. You can know about its features and uses here.

While the Trading Bots sound like an effective trading strategy, it is challenging to gauge their actual performance, and no bot provider would ever provide this. In Arbitrage trading, these bots could be quite useful and have a distinct advantage as they can quickly learn about the slightest price movement and make a decision and keep scanning for such price differences across geographies. However, as the strategy gets complicated and affected by more inputs, it gets tough to rely on a computer program entirely. So, make sure to trade cautiously and be fully aware of the actions performed.

dYdX raised $10 Million to help you short Ethereum

A crypto startup dYdX raised $10 million from investors to design and develop a sowaftre that assist individuals to borrow money from each other without a broker. The firm has developed a margin trading protocol that is based on the computing network Ethereum. The prime motive is to provide a platform to individuals to create new cryptocurrency-related financial products, like interest-generating loans, short sells, or leveraged long positions.

The team is set to launch more assets that includes a long leveraged Ethereum token, that is designed to amplify the gains/losses of traders trading on margin. The team is also planning to add newer assets in future depending on their liquidity such as native coin of 0x or the ZRX token.

Read more at fortune

BlockFi Support Litecoin, GUSD For Crypto-backed Loans

BlockFi co-Founder Zac Prince said in a statement – We have added GUSD and LTC to be used as collateral for crypto-backed loans. This is the company’s first expansion of accepted collateral into top-10 cryptocurrencies. As per the press release – The newly added GUSD option will empower BlockFi to offer loans at any time, and not only during US bank hours. As BlockFi vice president of operations and co-founder, Flori Marquez said – Many parts of the world yet do not have easy access to low-cost credit. With BlockFi support to GUSD, we are looking forward to providing stability to citizens of regions with less stable currencies.

Read more at benzinga.

 

Crypto Margin Trading – Everything you need to know

How could a crypto investor who has a limited amount of cryptocurrency add leverage to his investment portfolio? One of the options that could pay off but is a risky investment is Margin Trading. Margin Trading allows investors to upsurge the amount to be invested without holding the assets. Though it sounds simpler is considered to be a risky strategy and not recommended for everyone.

What is Crypto Margin Trading?

Margin Trading is a concept where the traders are allowed to open a position with leverage. Picking an example would be beneficial here –

Assume you are keen to purchase 1000 shares of XYZ, which are currently trading at $5, so the amount of capital you need is $5000[1000*5]. Now with Margin trading, you can buy a future contract of XYZ by paying 20% margin, that means by investing $1000 you can get exposure to the stock of value $5000.

Leveraging has helped an investor to manage a portfolio worth $5000 with just $1000. Leveraging would also help in making profits if the prices of the stock shoot up.

In crypto world, the concept is similar where Margin Trading is conceivable due to growing interest of cryptocurrency users in the lending market. Funders offer loan to investors, while lenders earn interest on the loan released, the investor uses this money [ in crypto, bond or fiat form] to invest in more significant amounts of coins.

Lets again pick an example –

So you are planning to buy $10,000 worth of Bitcoin

With borrowing 50% Or leveraging 2:1 or 2x

Then you would only need $5000 to purchase a bitcoin worth $10,000.

Globally, we have two types crypto exchanges model, one where customer themselves offer the loan for the margin market and second where exchange itself provides them.

Costing of Crypto Margin Trading

Margin Trading is considered to be a risky investment and hence also serves as a high return strategy. So while leveraging is the best reward earned, it could also turn into bankruptcy risk when there is a steep fall. So as the investor’s chance of gaining more increases at the same rate there is an increase in the risk to lose more. Hence exchange fixes a value called as liquidation value. It is the value where any exchange would automatically close your position so that you do not lose any of the loaned money, and only lose your own money.

Cost of Crypto Margin Trading

The cost of a margin position would include

  1. The interest for the borrowed coins
  2. Fees for opening a position with the exchange

Continuing the same example of borrowing $10,000 worth of bitcoin with 2X leverage you would need $5000, so either you can borrow this money from exchange/lenders that would mean to pay interest and also a fee for opening a position with the exchange.

So total cost of buying a theoretical $10000 worth of bitcoin would be –

= $5000 + interest [ varies from 5% to 50%] + fees

Our next post would talk about the pros and cons of Crypto Margin Trading. Stay tuned.

If you liked our post, please follow us on twitter [@getnuo] to get latest updates and insights.

SEC halts trading in two cryptocurrency products

On Sunday US Securities and Exchange Commision suspended trading in two investment products that track cryptocurrencies. The Markets were in confused state with rumors that the products are Exchange Traded Funds[ETFs]

The SEC said in a statement that trading in Bitcoin Tracker One CXBTF.PQ CXBTF.PK and Ether Tracker One CETHF.PQ CETHF.PK would be halted in the United States until at least Sept. 20. As per the notice issued by SEC, it says – It appears … that there is a lack of current, consistent and accurate information. Application materials submitted to enable the offer and sale of these financial products in the United States, as well as certain trading websites, characterize them as ‘Exchange Traded Funds.

Read more at Yahoo Finance


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

BlackRock begins exploration of bitcoin

The $6.3tn expenditure powerhouse has designed a group from various sections of the business to look into cryptocurrencies and their underlying infrastructure, blockchain. Resources stated the group of experts is also searching at what BlackRock’s opponents are executing with cryptocurrencies and how that could impact its organization. The doing the job team will make current its conclusions to senior administration. At the time, the CEO said bitcoin and other cryptocurrencies have been “far from” remaining a prospect for institutional buyers, including that none of BlackRock’s consumers wanted to commit in it.

Read more at fnlondon


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

Bitcoin will become the world’s single currency: Jack Dorsey

Bitcoin will overtake the dollar in importance as it becomes the single global currency of the internet within a decade, Jack Dorsey, one of Silicon Valley’s leading entrepreneurs, has said. Despite recent weakness in the value of bitcoin and concerns that it cannot currently process transactions fast or cheaply enough to act as a currency, Mr Dorsey, who is chief executive of both Twitter and the payments company Square, believes that bitcoin will overcome these obstacles and will be used to buy everyday items such as coffee.

Read more at The Times

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