The rise in cryptocurrency prices this year has been driven by a large volume of debt, with traders using leverage to amplify their gains. Now, after a sell-off over the past two weeks, the dangers of these bets are becoming clear.
Investors have never had more ways to place complex crypto bets. In some cases, people can deposit $1 of their own money to gain exposure to $100 worth of bitcoin. It is a strategy that can generate exceptional profits when the market is against the borrower. If this goes in the wrong direction, traders can face big losses and see their holdings liquidated if they don’t deposit enough funds.
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