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How Does the Volatility of Bitcoin Affect the Maintenance Margin Requirement for BTC-margined Contracts?

High BTC volatility requires a larger maintenance margin buffer to protect against the collateral's fiat value dropping, which reduces effective leverage.
Greeks.Live22.11.25

How Does the Volatility of Bitcoin Affect the Maintenance Margin Requirement for BTC-margined Contracts?

The high volatility of Bitcoin (BTC) necessitates a higher maintenance margin requirement for BTC-margined contracts compared to stablecoin-margined ones. Since the collateral itself (BTC) is volatile, its fiat value can drop rapidly.

To protect the exchange from negative equity, a larger margin buffer is required. This means traders must post more BTC collateral to maintain the same position size, effectively reducing the available leverage and increasing the capital required to trade.

Compare the Capital Efficiency of Fiat-Backed Vs. Over-Collateralized Stablecoins
What Is ‘Effective Leverage’ and Why Might It Differ from the Platform’s Stated Leverage?
How Does Using Stablecoins versus the Underlying Cryptocurrency (E.g. BTC) as Collateral Affect Leverage?
How Does the Volatility of the Collateral Asset Affect the Required Collateralization Ratio?

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