One of the characteristic features of the credit economy is the use of marginal lending or trading “on credit. This is not uncommon in traditional financial markets, especially when dealing with derivatives. Using leverage (borrowed funds provided by broker or marketplace) trader can greatly increase his potential profit, but the risks increase too.
The “degree of tension” on the crypto market is higher because of the super volatility. The relative growth rate of the exchange loan segment is high. For example, the Japanese Financial Services Agency (FSA), which acts as a regulator, reports an increase in margin trading in the country (including derivatives) from $2 million in 2014 to $543 million in 2017.
Given the uncertain legal status of many exchanges, their diversity, and different credit solutions for trading venues, it’s safe to say. margin trading inevitably has an impact on the market. It remains to be seen how much of that impact.