Huobi will reduce the max leverage because of new Chinese restrictions. Colin Wu told about this in his Twitter account.
According to local media reports, one of the biggest cryptoexchanges intends to reduce the max leverage from 125x to smaller than 5x for registered market participants. New customers will be even less fortunate since the leverage functionality won't be available for them. The main version of such a positive "innovation" is considered to be the tightening of measures related to monitoring digital currency activities in the country.
Leverage permits experienced traders to borrow an impressive amount of funds to potentially increase their bottom line. Nevertheless, if the rate “plays” abreast, this may lead to the liquidation of the margin and the need to repay the loans, or to the addition of additional endorsement. Unless, of course, the trader is interested in a negative balance. Naturally, it is always worth considering that such tools can be disastrous for beginners. This is the reason why global regulators attempt to decrease such dangers for investors, forcing the exchanges to reconsider, or even remove such "bearish services".
It is not yet known how permanent this update will become for Huobi and whether it will lead to a certain “outflow” of local traders to other cryptoexchanges. According to Colin Wu, if traders can't use borrowed funds on Huobi, then most likely they will simply switch to Binance. The main thing is that the latter also does not end up under the gun of the local authorities. Wu stressed that many Huobi investors have side wallets on Binance and OKEx. Therefore, migration can become painless for them.
Today Huobi is the 3rd biggest cryptoexchange in the world on CoinMarketCap, right after Coinbase and Binance. Its daily trading volume is more than $12.3 billion.
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