Huobi, one of China’s most popular Bitcoin exchanges, has reportedly slashed their maximum leverage allowance from 125x to less than 5x for existing users on the back of China’s regulatory crackdown on cryptocurrencies. New users signing up to the platform will not be able to use leverage at all.
Exclusive: Due to concerns about regulatory policies, China’s largest exchange Huobi recently restricted the leverage of existing users to less than 5x after stopping new users in China from using derivatives. The previous maximum was 125x pic.twitter.com/B5MWVJYGzK
— Wu Blockchain (@WuBlockchain) June 16, 2021
Leverage and its Effects
Leverage allows traders to borrow huge sums of money and add them onto a position, which can increase profits. However, a slight move against them can result in a margin liquidation (the loan must be paid off or more collateral must be added before the trader’s balance goes into the negative).
The availability of high amounts of leverage (often up to
