Leverage in crypto trading on Bybit

Hello fellow brothers,

I started trading crypto currencies, I used to trade Forex but i dont know if it is halal anymore.
In crypto trading, you can use leverage if you want on some exchanges, but it is not necessary unlike the Forex.
On bybit for example, a cypto exchange market, when you use leverage, you take the whole profit or lose all the money when the trade is closed, but there is no interest. If you ‘‘borrowed’’ 50 000 $ off the exchange market for a trade, you will have to repay them the whole amount of money whether you lose or win, but there is no interest. Is it halal?

Wa alaykum salaam,

Are there fees for this form of borrowing?

yes.

here is a good article about fees… https://blockduo.com/bybit-fees/

It seems like they charge an interest on leverage after 8 hours, which they call funding fees.

So does that mean you can day trade … get in and out of a trade with leverage within the 8 hours before they charge the funding fee to be halal?

Jzk

Here is an article on the bybit website.

Interestingly they don’t mention ‘interest’ directly. The funding fee is exchanged directly between buyers and sellers.

To be fair I am not exactly sure brother.
They explain the fees on their website on this link:


I did not exactly understand 100% of what they are saying, therefore I cannot tell if it is interest or not. Perhaps you could enlighten me.

Assalaamu alaykum,

Whenever fees are charged with leverage facilities, it enters the great zone. The principle for fees with loans is that fees can only be charged for actual expenses incurred. Most of the time, the fees in such facilities is beyond just actual expense.

I would avoid this leverage facility.

Assalamoe aleykum,

I am by no means an expert, but don’t you also have to take in consideration if what you by is a spot purchase or contract based? Like in do you own the purchased crypto in order for you to sell it?

That’s absolutely right. You must own before on-selling.

but do you not own the contract in question?

It is not enough to own a contract. A contract is just an obligation or the right to receive either a cash flow or an asset or a service. You need to own something and not merely a claim.

I am guessing this also applies to option trading for stocks?

Isn’t the funding fees just a way to stablise the Bitcoin price.

In order to anchor the perpetual contract trading price to the spot price, we’ve introduced the funding mechanism.

Here’s a brief overview of how it works; should the trading price sit above the spot price, long position holders will pay the funding fees to short position holders. It incentivizes traders to open more short positions and brings down trading price, shifting towards the spot price. If the trading price is lower than the spot price, short position holders will pay the funding fees to long position holders, whereby the latter is placed in the driving seat to open more positions. Thus, it drives the prices up and achieves a similar objective to narrow the spread.

And the exchange does not actually benifit from this funding fees, it is exchanged directly between the platform users.

What is the Funding Fee?

Hopefully Mufti can take a deeper look this and provide some insight.

Brother, so what conclusion did you come to. I am interested in the same subject and would like to get your thoughts.

Nothing yet, im not competent enough to know, so im just waiting for a trustable answer and holding longterm bitcoin and ethereum.

Wa alaykum salaam,

Yes, it applies to option trading as well.

@Mufti_Faraz_Adam Asalaam wrwb, what is your opinion concerning binace leveraged “up” tokens? Is this permissible to trade with or not?

Salam All,

I read this thread, and I did not manage to grasp the conclusion. Is it okay to leverage trade on ByBit?
Thanks

@Inam,
Bro, did you find an answer? I am interested.

@Mufti_Faraz_Adam,

Salam Alikom Mufti,

Is permissible to do leverage on Bybit or FTX?
Thanks

As mufti Faraz said above.

“I would avoid this leverage facility.”

Ive been following this advice. but I would be interested to know if anything has changed and if we can use leverage when trading.