What is Crypto 30x?

华人网 2024-9-12 19:50

What is Crypto 30x?

Crypto 30x typically refers to a leveraged trading product that offers up to 30 times the exposure to cryptocurrency price movements. For example, with 30x leverage, a $100 investment could control $3,000 worth of cryptocurrency. This can amplify both potential gains and losses.

What is leverage in cryptocurrency trading？

Leverage, in short, is the use of borrowed funds to trade cryptocurrencies or other financial assets. With leverage, you can greatly expand your trading capital far beyond the actual amount of money you have in your wallet. Specifically, depending on the cryptocurrency trading platform you choose, you may be able to borrow up to 100 times your account balance. Leverage is usually presented as a ratio, such as 1:5 (meaning 5x leverage), 1:10 (10x leverage), or 1:20 (20x leverage). This ratio clearly shows the magnification of your initial capital. For example, let's say you only have $100 in your trading account, but you want to open a Bitcoin (BTC) position worth $1,000. If you use 10x leverage, your initial $100 will instantly have the purchasing power of $1,000. There are many different cryptocurrency derivatives that you can trade with leverage, with common types including margin trading, leveraged tokens, and futures contracts.

How leveraged trading works

You first need to deposit funds into a trading account before you are eligible to borrow funds and open a leveraged trade. The initial funds you provide are called collateral. The amount of collateral required depends on the amount of leverage you are using and the total value of the position you wish to open (this is called margin). Let's say you want to invest $1,000 in Ether (ETH) with 10x leverage. The required margin would be 1/10th of $1,000, which means you would need to have $100 in your account as collateral for the borrowed funds. If you use 20x leverage, the margin required is even lower (1/20 of $1,000, or $50). However, it is important to keep in mind that the higher the leverage, the higher the risk of forced liquidation of your position. In addition to your initial margin deposit, you will need to maintain a specific margin threshold for your trades. When the market moves against your position and your margin falls below this maintenance threshold, you will need to put more money into your account to avoid the risk of having your position closed. This threshold is also known as maintenance margin. Leverage can be applied to both long and short positions. Taking a long position means that you expect the price of an asset to rise. Conversely, taking a short position means that you expect the price of the asset to fall. Although this sounds superficially similar to regular spot trading, by using leverage you are able to buy and sell assets based solely on the collateral rather than the size of the funds held. So if you think the market is going to go down, you are able to borrow the asset and subsequently sell it (thus creating a short position), even if you don't hold the asset in your hands.

Leveraged Risks High Leverage:

There is currently a large amount of leveraged trading in the market, which makes the market more vulnerable.