Without the margin trading, the CEO would have lost 20 Bitcoins, which is still a hefty sum of USD 182,000, but with the 100x leverage the debt rose to millions of dollars.
By leveraging your trade, you multiply your profits with a small investment. Leverage trading was popularized by the BitMEX platform, where you have up to 100x leverage. While it is a tool to amplify your profits, positions can easily be liquidated if the market moves only slightly in the other direction, especially if your leverage is high.
With a 100x leverage, Bitcoin only has to go 1% in the opposite direction of the position of the trade to initiate liquidation and considering BTC’s volatility, the fluctuations can easily go over 1% in both directions.
Leveraged margin trading is a feature which is been incorporated by more and more trading platforms. The latest to introduce margin trading is Binance, which is still testing the feature on its platform.
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