Leverage Margin Financing

Definition ∞ Leverage margin financing is a trading strategy where individuals borrow capital to increase their market exposure to an asset, using their existing funds as collateral. In digital asset markets, this practice allows traders to amplify potential gains or losses from cryptocurrency price fluctuations. It necessitates maintaining a margin account to cover potential adverse price movements. This method carries elevated risk.
Context ∞ Leverage margin financing is a prominent feature offered by many cryptocurrency exchanges, providing opportunities for substantial profits but also exposing traders to heightened risk. Regulators globally are increasingly scrutinizing these offerings due to concerns regarding investor protection and potential market instability caused by volatility.