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The backlash of the recent abrupt decline of Terra’s Luna continues as Binance delists it from its futures trading.
The Binance derivative arm made the announcement earlier this morning. The exchange prompted all traders with currently opened positions to close them no later than 8:30 am (UTC) today when the delisting officially took place. Once the delisting happened, they would automatically settle all USDT-Margined LUNA perpetual contracts.
Furthermore, the exchange reviewed the LUNA perpetual contracts’ leverage and margin tiers. It then updated the leverage maximum from 21-25x to 8x at positions from 0- 50,000 and its initial margin rate is now 18.50%. As for the minimum, it remained stable. All others were equally untouched apart from the 11-20x and the 6-10x which were moved to 7x and 6x respectively.
The updated tiers, however, did not affect all positions that were already open.
Background on Binance’s Leverage Limits
Binance Futures had previously put in place leverage limits to oversee traders whose future accounts had been registered for 60 days and below. The idea behind it was that the notional size users can open depended on the leverage limit they have. For instance, a higher leverage limit means a smaller notional size and vice versa.
The Obvious Reason
This latest move by the cryptocurrency firm is not by any chance a surprise considering the massive setback Terra suffered within the past few days. The stable coins USDT depegged from the dollar and started to drop this week. As a result, UST and LUNA holders panicked and engaged in a massive sell-out. This only exacerbated the issue and led to a price crash that would have been earlier considered possible. After trading at about $86 this time last week, Terra’s LUNA is down by 99.98%, trading below 2 cents.
At first, on Tuesday, Binance suspended all withdrawals for both LUNA and its sister coin UST. Exchanges Kraken and KuCoin followed suit. Binance’s delisting of LUNA’s coin-margined futures contract appears to be the latest blow in the coin’s growing. The exchange also retains the right to make other changes to the max leverage limit and margin tiers for LUNA perpetual contracts without notice.