Introduction: Why Traders Need to Understand Leveraged Tokens
Imagine a scenario: the Bitcoin market is on the rise, and you have $1,000 in funds. You can choose to buy Bitcoin directly, waiting for the price to rise from $1,000 to $1,200 before selling. But there's another way — amplifying your gains through leveraged tokens. If you invest in a 3x leveraged token, a 20% increase in Bitcoin could result in a 60% return, potentially growing your initial investment to $1,600. It sounds very attractive, but what risks are hidden behind this?
Leveraged tokens are an innovative tool in the crypto derivatives market, allowing traders to gain leveraged market exposure without using traditional margin accounts. Unlike traditional leveraged trading, leveraged tokens have built-in risk control mechanisms, but this does not mean they are risk-free.
What Are Leveraged Tokens: Basic Concept Explanation
Leveraged tokens are a