A platform has launched a leveraged bitcoin contract-for-difference (CFD) product, enabling traders to speculate on the cryptocurrency’s price movements against the Japanese yen and United States dollar.
Liquid says demand for crypto derivatives is rising and believes these financial products have the potential to enhance awareness about the many hundreds of coins and tokens in the marketplace today.
Crypto derivatives are gaining popularity because of how they can help protect traders against volatility in the marketplace. When it comes to futures, traders may benefit from being able to buy or sell crypto at a preagreed-upon price on a fixed date in time. These contracts enable them to lock in the value and secure some uncertainty in an unpredictable market.
They can also be useful from a speculation perspective, especially if a trader believes that the value of a cryptocurrency is going to rise or fall in future. However, derivatives are not without their risks. While traders are paid the price difference by a broker when their analysis is correct, they would have to compensate the broker if the asset’s value went the other way.
One of the main challenges when dealing in crypto derivatives is making sure that prices on brokerage platforms is up to date.
Liquid says that its new service, Liquid Infinity, has been specifically tailored to the needs of professional traders. The company’s platform enables traders to leverage their positions up to 100x, “maximizing their exposure with minimum upfront capital.”
Mario Gomez Lozada, the chief product officer of Liquid, explained:
“We are well-known for our advanced trading platform features geared towards pro traders, in particular our core margin product with up to 25x leverage.
“Infinity will enable traders to amplify their risk-to-reward ratios with the existing risk management tools we have in place for our margin product, such as stop-loss orders and other advanced charting indicators.”
Liquid says that Infinity is accessible through a “sophisticated user dashboard,” along with other features that include margin trading of up to 25x leverage for a range of other preselected crypto-fiat pairings.
The Liquid platform — which is owned by Quoine, a company with offices in Japan, Singapore and Vietnam — says it offers secure cold wallet storage and Know Your Customer (KYC) compliance for both individual and corporate customers.
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Beneficial for market players
According to the platform, the crypto derivatives offered by Liquid Infinity have the potential to be highly advantageous to market players.
The company says that liquidity is essential for ensuring that digital assets can be bought and sold quickly and easily — and that liquid markets usually boast high numbers of buyers and sellers, ensuring there is supply and demand for transactions to take place.
Liquid Infinity’s leveraged bitcoin CFD means that consumers can speculate on price movements without actually owning the cryptocurrency themselves. Through this product, traders have an opportunity to predict whether prices will rise or fall against the aforementioned U.S. dollarUSD and Japanese yen — and in some cases, they can capitalize on minor movements in value.
Leveraging can help amplify the outcome of correct predictions, but this does present the risk of exacerbating losses if prices go against a trader’s original forecast.
CFDs have long been a mainstay of more traditional financial marketplaces, used for shares and forex. However, their presence in the crypto world is quite new, and Liquid Infinity is one of the few players in the industry today, as many crypto exchanges don’t offer CFDs at present.
Market players who are accustomed to trading CFDs in other sectors normally find adjusting to crypto quite straightforward, and Liquid says it has tried to make the registration process as quick and painless as possible.
Liquid adds that its bitcoin CFD can be a powerful tool for crypto traders who are looking to diversify their portfolios — delivering short-term trades to complement their longer-term strategies.