Definition ∞ Leverage products are financial instruments that allow investors to gain amplified exposure to an asset’s price movements with a smaller initial capital outlay. In the crypto market, these include perpetual swaps, futures contracts, and margin trading, where users borrow funds to increase their trading position. While offering potential for higher returns, they also significantly magnify potential losses. These products are often used by experienced traders to speculate on price direction or hedge existing positions.
Context ∞ Leverage products in the cryptocurrency market are a constant topic in news, particularly concerning market volatility and regulatory oversight. Reports frequently cover large liquidations during market downturns, highlighting the inherent risks for retail investors. Regulators worldwide are debating strict rules or outright bans on high-leverage crypto offerings due to investor protection concerns. The responsible provision and use of these instruments remain a significant challenge for the digital asset industry.
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