A Leveraged Strategy in digital asset markets involves using borrowed capital to amplify potential returns on an investment. While it can increase gains, it also significantly elevates the risk of substantial losses, as adverse price movements are also magnified. This approach requires careful risk management due to its amplified exposure to market volatility.
Context
The use of leveraged strategies is a prominent feature of cryptocurrency trading, often discussed in market analysis and news for its potential for both rapid wealth creation and liquidation. Debates frequently concern the accessibility of high leverage to retail investors and the systemic risks it poses to platforms during periods of market stress. Regulatory bodies are increasingly examining leverage limits and associated disclosure requirements to protect market participants.
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