Leveraged Exposure

Definition ∞ Leveraged exposure refers to an investment position that uses borrowed capital to amplify potential returns or losses. In digital asset trading, this means controlling a larger amount of cryptocurrency with a smaller initial capital outlay. While it can magnify gains, it also significantly increases the risk of rapid liquidations. Traders employ this strategy to capitalize on market movements.
Context ∞ Leveraged exposure is a prominent feature in cryptocurrency markets, frequently highlighted in news regarding market volatility and liquidations. Discussions often address the inherent risks for retail investors and the potential for systemic market instability during significant price swings. Regulatory bodies are increasingly scrutinizing platforms offering high leverage, suggesting future restrictions to protect consumers and market integrity.