Crypto Whales Are Loading Up — Are You?
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Speaking to Benzinga, CMC Markets Chief Market Analyst Michael Hewson said that the losses FXCM Inc (NYSE: FXCM) has suffered following the Swiss National Bank’s move will probably cause the forex industry to change how it regulates margins.
“A lot of the damage that’s been done has basically been a result of high leverage,” Hewson explained.
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He added that the EUR/CHF has traded in a ten-point range over the past couple of weeks, which causes people to increase their margins, because that’s the only way to make any meaningful profits.
“If the market moves in a tight range and its low volatility, your margins generally tend to go up, but the risk with that is if you do get an adverse market movement either up or down, you make a lot of money or lose a lot of money,” he said.
In yesterday’s case, Hewson explained, the bids just disappeared. Once the SNB pulled its currency peg, all the bids got pulled and the next price that came in after 120 was 101, Hewson said. That’s a 19-figure move.
“Well, if you’re margined up to the eyeballs, that’s basically bankruptcy,” he said.
Shares of FXCM were halted on Friday, but then resumed trading after hours.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.