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I think the biggest problem with crypto is leverage. Over 2 billion liquidated in 12 hours. This is how a normal 5% drop turns into a 20% drop. One person sell
by impulser_ 5y ago
I think the biggest problem with crypto is leverage. Over 2 billion liquidated in 12 hours. This is how a normal 5% drop turns into a 20% drop.
One person selling a few million in Bitcoin can cause a few billion drop in the whole market lol.
I think regulations on leverage would be the best thing for the crypto market as a whole.
You can sign up for an account at an exchange and get 10x leverage without KYC or anything. That's insane.
- SpelingBeeChamp 5y agoWho is covering that credit risk? Or is your point that no one is, and that if enough levered trades go the wrong way, the whole system is at risk?
- impulser_ 5y agoPretty much. Most exchanges will automatically sell your position at market price if you reach a certain percentage of margin. That how you get the massive dips that get bought very quickly. You have tens of thousands of Bitcoin being sold at market price. It causes a domino effect across the whole crypto market because people are using leverage to buy any coin even shitcoins like Doge and Shib.