Leverage. It’s a word that lures many new crypto traders with the promise of quick riches. But beneath the allure lies a dangerous trap that has led countless traders to financial ruin.
Why is leverage considered a “disease” in the crypto world? Let’s delve into the reasons:
Leverage offers the illusion of turning small amounts of money into a fortune overnight. New traders, blinded by the promise of 100x or even 125x gains, often forget about responsible money management and end up going “all in.”
The constant adrenaline rush of seeing profits and losses fluctuate wildly can be addictive, leading to impulsive decisions and a distorted perception of risk. This leverage-fuelled addiction can damage a trader’s psychology and lead to devastating losses.
Leverage can create artificial price movements in the crypto market. Imagine the collective buying power of traders should only push Bitcoin’s price from £60K to £63K. But with leverage, they have the artificial buying power to push it to £70K. This artificial inflation is unsustainable.
