There’s a shift beginning across the crypto market: institutions are finally entering, and it’s already having a powerful impact on the price of Bitcoin. This also means that the crypto mainstays of the last bull run – such as Binance and Coinbase – are in danger of being decimated by established traditional financial firms with trillions of assets under management who are beginning to enter the space and cater to the growing institutional demand.
This has prompted the current industry powerhouses to step up their game, adding new features, and serving the needs of more advanced traders and investors by adding trading options like margin, which the exchanges have not offered in the past. But will margin trading and other features geared toward more advanced traders be enough to prevent total demise at the hands of the likes of Fidelity and other Wall Street behemoths.
Investment Analyst: Crypto Going Mainstream Spells Doom for Coinbase and Binance
The battle for the top crypto exchange has heated up in recent weeks, as each platform introduces new features that appeal to a broader range of more experienced investors.
Unfortunately, though, the attempt may be futile now that “big banks” and “large brokerage houses” are entering the crypto market, according to investment research analyst Ahmad Khokhar.
At the end of the day, who you align with will come down to fees/service. https://t.co/WP6BM4gGAt
— Ahmad Khokhar (@khokhar_ahmad) May 29, 2019
The analyst asserts that while the crypto community argues over who will dominate the crypto market between Coinbase and Binance, they are in grave danger of being “acquired” or going “out of business.” Kohkhar says that “big banks” such as Fidelity and JP Morgan will “eat Binance and Coinbase alive.”
Margin Trading Debuts on Beta Binance 2.0, Industry Reacts
The power of these businesses, some with decades of investment experience and trillions of assets under management cannot be understated. And as was witnessed during the dot com bubble with Microsoft and Netscape, being first and dominant doesn’t always last.
One way these early crypto exchanges are hoping to stay ahead of the pack is by adding margin trading options when most investors using the platform have been restricted to spot buying and selling of crypto assets. Coinbase CEO Brian Armstrong said his firm is considering margin in the future during a recent Youtube AMA, and Binance just today launched the beta version of “Binance 2.0,” as they’re calling it – complete with margin trading pairs enabled with 2x leverage.
Binance margin (beta) is live
— Unfolded (@cryptounfolded) May 30, 2019
However, the crypto industry is already showing much disappointment in Binance’s max leverage of 2x. While some top traders predict that margin trading could be the key to Binance achieving wild success, the 2x leverage falls significantly below the 100x offered by BitMEX, PrimeXBT, and Deribit. It’s even below the 3x and 5x leverage offered by Kraken, Bitfinex, and OKEx, leaving traders eager to take the new Binance for a spin feeling let down.
Binance only allows 2X Margin trading? That's kinda disappointing 🙁
— Hisoka (@HI3OKA) May 30, 2019
Binance also announced the assets that are available for trading using margin and they include Bitcoin, Ethereum, Tron, Ripple, and their native BNB token. The firm also falls short of other exchanges here, with BitMEX offering eight total crypto assets and PrimeXBT offering five in addition to other more traditional assets on leverage.
— Crypto Rand (@crypto_rand) May 30, 2019
The lower leverage may also be Binance being a responsible member of the crypto community, as a crypto exchange offering the ability to purchase highly volatile assets using a credit card, then immediately turn around and trade those assets on leverage is a recipe for disaster for the company’s userbase, which is likely rife with retail investors that would be experiencing margin trading for the very first time.
Only time will tell if these latest moves will be enough to help Binance and Coinbase survive against the big banks that crypto was designed to stand up against.