BTC returned to the vicinity of $38,000. A single-day price fluctuation of more than 10% has become the norm for BTC. I think many people have been eagerly wanting to buy the bottom, or even leveraged funds to speculate on BTC. As a brand-new cryptocurrency system, it is not yet known whether BTC can become a brand-new currency system in the future, but the high risk of BTC has undoubtedly been exposed. Now I want to ask people who are still hyping BTC, what is the purpose of your BTC hype? Although many people have always insisted that investing in BTC is a value investment, I think the market has responded more honestly. BTC has become a highly speculative financial product.
Although BTC has experienced more than ten years of development and has a huge consensus system in the world, the future of BTC is still full of uncertainties. Whether it is a change in the country's BTC policy or the upgrading of network technology, it may bring huge risks to BTC. But as long as these risks do not appear for a day, BTC has the value of hype, which is also the value of BTC as a financial product. Moreover, the greater the volatility of BTC, the more attractive it is for some speculators, and the more it will attract investors.
And some hobbies stimulate BTC investors, and even feel that a single day's fluctuations of more than a dozen percentage points cannot satisfy their desire for wealth. Some people with high-risk investment capabilities will even obtain leveraged funds through "loans" to expand the risks and benefits of BTC hype. You heard it right. The leveraged funds we often hear are actually another form of loans.
Forced liquidation is the main means of avoiding risks in the BTC allocation account
To be honest, I personally don't have any real trading experience in BTC, and I don't know much about the specific operation of BTC leveraged funds, but I think it should be similar to the financing of the stock market. Regular trading institutions in the stock market have threshold restrictions on financing, but it is said that the organization of offline funds allocation, but these are suspected of violations. BTC's leveraged funds also have thresholds, but in order to attract more investors to join, the threshold for hype has been greatly reduced. However, regardless of the scale, formal and informal funding, leveraged funds will not allow you to easily withdraw cash.
Futures and leveraged funds need to involve a lot of professional terms. I will use the simplest and clearest method to explain to you the leveraged funds of BTC. Suppose you have a capital of $10,000, and 10 times leverage is a loan of $100,000, and a hundred times leverage is a loan of $1 million. These money need to pay interest as agreed, but you are not allowed to withdraw cash and can only be used to buy BTC. However, the interest on leveraged funds from formal channels is not high, and is similar to formal loans. This is not the main risk.
Many people may not understand that the risk of BTC hype is so high, why institutions still charge such low interest rates? If people who use leverage to speculate BTC lose money but cannot afford debts, will the bad debt rate of the funding agency be very high? When the price of BTC fluctuates sharply, I think many people have heard the words liquidation and liquidation. This is the unique feature of leveraged funds. Institutions use forced liquidation to sell BTC and futures contracts in the hands of investors to avoid the risk of BTC price fluctuations.
BTC allocation agencies may even use resources and information advantages to bet against users
For example, if a user buys the bottom of BTC by adding ten times leverage, the market drops by more than 10% in a single day, and the user theoretically loses his principal. At this time, in order to avoid damage to leveraged funds, the allocation agency will force users to sell the BTCs in their hands and recover the leveraged funds to users. In other words, if the user has no capital, he will lose the opportunity to turn around. In this process, in fact, the risk of funding agencies is actually very low, and it can even be said that it is still profitable.
This is one of the reasons why there are so many institutions supporting BTC. Users are responsible for the risk of speculating BTC. They are only responsible for earning service fees through BTC. As long as there is no extreme situation, such as a flash crash in the price of BTC, and no opportunity for institutions to liquidate their positions, then they are actually droughts and floods to ensure a bumper harvest. And some funding agencies are not even satisfied with earning service fees, but want to use resource advantages and capital advantages to bet against users, which is also one of the potential risks of BTC.
In the face of the huge benefits of BTC, capital giants may tear off their disguise at any time and harvest ordinary users. For example, power outages and network disconnections to exchanges. When BTC fell in this round, some mainstream trading platforms experienced downtime. Although there is no evidence to prove that there is a shadow of manipulation by capital giants, I think it is fair and easy, and the capital giants make some money and are very disgraceful. The risk of speculating BTC is inherently great, but the risk of "loan" speculating BTC will increase exponentially!
