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BitMEX Insurance Fund – What is this? Pros and Cons

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BitMEX insurance fund is marketed by the company as a tool to “help ensure winners receive their expected profits, while still limiting the downside liability for losing traders.”

BitMEX insurance fund is a feature not so common among trading platforms, and these kinds of functions make a difference between market leader and those not so successful.

Despite the fact that cryptocurrencies still have a relatively juvenile market, since the large breakout of 2017, some leaders have been established among crypto trading platforms. These are institutions that have successfully managed to overcome baby steps and offer their clients something more than usual.

One such platform is BitMEX. So, let’s dive into explaining their insurance fund and how it functions.

What is BitMEX?

The official website simply states that “BitMEX is a trading platform that offers investors access to the global financial markets using only Bitcoin,” and this is a thing that differentiates BitMEX from other trading platforms. However, it is not the only one.

BitMex offers its users a variety of other options which others do not.

From perpetual, leveraged swap contracts, across a variety of leverage options and many different kinds of trading contracts, to UP and DOWN trading options and Futures, BitMEX has taken crypto trading to another level.

Furthermore, their users have an insurance fund, which is the main topic of this article, so let’s dive into explaining what it actually is and how it functions.

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What is an insurance fund?

In terms of trading, an insurance fund can be defined as a protective tool that shields from a trading contract loss. For example, let’s say that liquidation of the contract happens, and when the execution price is lower than the bankruptcy price, the insurance fund will be used to cover for the losses.

What is BitMEX insurance fund?

BitMEX insurance fund is marketed by the company as a tool to “help ensure winners receive their expected profits, while still limiting the downside liability for losing traders.”

What that means is that when a trader opens a  leveraged position and their maintenance margin is too low, their position gets liquidated and there is an insurance fund, currently stated to be worth around 21,000 Bitcoin (BTC) ensuring that a trader doesn’t end up in debt.

However, BitMEX insurance fund doesn’t work exactly like its counterparts in traditional markets. Once the trader gets liquidated after opening a position with leverage on BitMEX, his equity related to the position always goes down to zero.

Here is how it actually works:

Say that the trader has:

  • 100x long position
  • 1 BTC
  • price at the opening $9000

If the price of Bitcoin falls by 0.5% (to $8,550) the contract gets liquidated. Now, the 100 BTC position needs to be sold on the market. A trader that got liquidated has no consequence what the price of that transaction will be since he lost one Bitcoin in any case.

Therefore, we can say that BitMEX insurance serves more to ensure that winning traders get what they traded for than to ensure the losing party financial security. What BitMEX will do for the losing trader is that they have other mechanisms that ensure that the trader’s balance can’t go below zero.

Still, BitMEX warns that considering that the insurance fund is capped, an occurrence where there aren’t enough funds to cover all the winners’ gains is possible.

Do all trading platforms have an insurance fund?

Insurance funds are still not common among cryptocurrency trading platforms because simply put, these institutions are still not as powerful as the traditional exchanges. This also happens because of the very nature of the underlying assets.

However, some BItMEX competitors, like Deribit or OKEx do offer the same solution.

Should I trade on BitMEX? Pros and Cons

Pros

  • High leverage
  • Insurance fund
  • Liquidity
  • Lots of different products
  • No deposit/withdrawal fees
  • BitMEX Testnet

Cons

  • A high degree of knowledge needed to use the platform
  • Trading in BTC exclusively

Start Trading with BitMEX

If you found what you were looking for in our What is BitMEX insurance fund article, you may also be interested in reading What is BitMEX Testnet and How to Short Bitcoin.

The post BitMEX Insurance Fund – What is this? Pros and Cons appeared first on Cryptocointrade.

Source: https://www.cryptocointrade.com/crypto-trading-blog/what-is-bitmex-insurance-fund/?utm_source=rss&utm_medium=rss&utm_campaign=what-is-bitmex-insurance-fund

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Bitcoin Price Could Triple Even After a Modest Switch From Gold, JP Morgan Says

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Despite having a complicated past, it seems that JP Morgan’s love for Bitcoin is growing every day thanks to its potential as an investment and store of value.

In a recent report, the American bank shared with its investors an analysis of Bitcoin’s current situation and possible future scenarios regarding prices and fundamental value. The bank explained that under the current conditions, Bitcoin has a good chance of increasing its price.

JP Morgan Believes Bitcoin Could be an Alternative to Gold

JP Morgan believes that investors could switch from gold to bitcoin as a way to diversify their portfolio and having another uncorrelated storage of value. This is especially important for those who don’t want to depend exclusively on gold when it comes to diversify their risk exposure:

“Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price.

The report also adds that adoption is key to increasing Bitcoin’s perceived utility, and therefore, its price. They explain that it is necessary to observe a more significant number of “economic agents” accepting cryptocurrencies as a means of payment in order to talk about a historical price appreciation scenario.

This is not far from reality. In fact, bitcoin is increasing acceptance by large economic agents (which seems to prove JP Morgan’s thesis). The recent rise in prices from $10,500 to the current $13,110 began after the payment processor Square announced a $50 million investment in Bitcoin.

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PayPal’s announcement to support the purchase and sale of cryptocurrency -BTC, ETH, BCH, and LTC for now- also further catalyzed the crypto markets’ bullish sentiment.

A Generational Thing

JP Morgan also assures that Bitcoin’s acceptance within the global financial culture goes through a cultural or generational context. As boomers leave the market and millennials take a more prominent position, Bitcoin and other digital tokens become more relevant in the investment world.

“The potential long-term upside for bitcoin is considerable as it competes more intensely with gold as an ‘alternative’ currency we believe, given that Millenials would become over time a more important component of investors’ universe.”

However, this assertion must be taken with a pinch of salt since studies reveal that Gen Z -the Millenials’ offspring- are not as enthusiastic about the use of crypto, opting for alternatives involving the digitalization of fiat money.

Jp Morgan believes Bitcoin could be largely adopted, but GenZers think otherwise
Gen Zers are not really into Bitcoin. Image: Business Insider

JP Morgan’s statements show the bank’s ability to adapt to new market trends, which is also characteristic of PayPal. Just two years ago, the bank’s CEO said Bitcoin was “worse than tulip bulbs” while PayPal’s CEO referred to Bitcoin in the same way:

“Bitcoin is the greatest scam in history. It’s a colossal pump-and-dump scheme, the likes of which the world has never seen.

Bitcoin is having a good time, with many models anticipating potential upward behavior over the next few months. The most controversial and discussed one, the stock-to-flow model, predicts that Bitcoin could reach $1 million by around 2026.

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Source: https://cryptopotato.com/bitcoin-could-double-triple-price-gold-market-jp-morgan/

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Bitcoin Just Marked New 2020 High, But This Indicator Signals Correction Incoming (BTC Price Analysis)

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Starting by looking at the bigger picture, Bitcoin price had made a remarkable run since October began, gaining almost $3000 to its value.

Looking at the following long-term weekly chart, we can see this week’s greenish candle that will be closed later today. From a technical point of view, as long as the candle close price is above the $12,500 area (previous high) – we can safely say that BTC is on a healthy uptrend.

btc_oct25_w-min
BTC/USD weekly. Chart by TradingView

The Good and The Bad: New 2020 High but Bearish Divergence

Just a few hours ago, Bitcoin price recorded a new 2020 high close to $13,400 (on Binance Futures); however, the primary cryptocurrency could not hold there, and quickly slumped to $12,700 in a matter of one hour.

Looking at the shorter-term chart, the 4-hour, we can identify a bearish divergence on the RSI. This is a bearish pattern and might indicate that the buying power is fading away.

This happens when the price goes through a higher-high, but the RSI indicator is doing the opposite and going through a lower-high.

Another worrying sign is the trading volume. Since its peak volume on October 20-21, four days ago, the trading volume decreased even though the BTC price had actually gone up.

BTC Support and Resistance Levels To Watch

As mentioned above, if BTC were to correct, then the first major level of support lies at the current levels around $12.9 – $13K. If Bitcoin breaks here, then the first significant level lies at $12,700, followed by the previous 2020 high from August at $12,400 – $12,500.

From the bullish side, if Bitcoin holds the $13,000 – then the first levels of resistance lie at $13,200, followed by today’s high around $13,400. Bitcoin will be looking to break the 2019 high from June – at around $13,880.

Total Market Cap: $400 billion

Bitcoin Market Cap: $240 billion

BTC Dominance Index: 60%

*Data by CoinGecko

BTC/USD BitStamp 4-Hour Chart

btc_oct25_4h-min

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/bitcoin-just-marked-new-2020-high-but-this-indicator-signals-correction-incoming-btc-price-analysis/

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Bitcoin Breaks New 2020 High As Total Market Cap Topped $400 Billion (Market Watch)

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Bitcoin continues with the 2020 records and just a few hours ago marked a fresh high of above $13,350. Most alternative coins followed suit with impressive increases, but the market has calmed since then. The entire cryptocurrency market clocked at above $400 billion.

Bitcoin To Yet Another 2020 High

CryptoPotato reported a few days ago that the primary cryptocurrency exceeded the August 2020 high of about $12,500 and reached $13,200. What followed was a slight retracement to about $13,000 and stagnation yesterday.

Nevertheless, the volatility returned in the past 24 hours, and BTC headed towards new highs. This time, Bitcoin broke above $13,350. In fact, according to data from Bitstamp, BTC’s new 2020 high is at $13,362.

Another sharp rejection followed, and the asset tanked briefly below $13,000. Nevertheless, the bulls have since driven it above the coveted mark, and BTC trades at about $12,940.

A compelling chart recently revealed that Bitcoin is forming an inverse head and shoulders pattern. If it’s to play out, the cryptocurrency could soon skyrocket even further and top its all-time high of $20,000.

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If this scenario is indeed to materialize, Bitcoin would have to break above the resistance lines at $13,420, $13,500, $13,815, and $14,000 before reaching new records.

btcusd_chart
BTC/USD. Source: TradingView

Altcoins Follow Up And Calm Down

Most alternative coins experienced similarly increased volatility as Bitcoin. Ethereum surged to a new 7-week high of nearly $420. However, ETH quickly retraced and is now hovering around $409 again.

Ripple’s highest level came at about $0,26, but XRP has since decreased to below $0.253.

Thus, on a 24-hour scale, most larger-cap altcoins have remained essentially at the same positions as yesterday, despite the brief price jumps. Chainlink and Litecoin have registered the most gains of about 3.6%. LINK trades close to $12.35, and LTC is positioned at $56.3.

heatmap
Cryptocurrency Market Heatmap. Source: Quantify Crypto

The most impressive gainer since yesterday is Filecoin. After the recent controversy and continuous price slump, FIL has surged by 45% in the past 24 hours.

Ocean Protocol (18%), Quant (17.5%), THETA (10.2%), Reserve Rights (10.2%), and Ampleforth (10%) have also increased by double-digit percentages.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/bitcoin-breaks-new-2020-high-as-total-market-cap-tops-400-billion-market-watch/

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