Lecture 2: Leveraged Crypto ETFs - Advantages

These are the advantages offered when trading leveraged crypto ETFs.

• Spot trading and no need of margin

Traders can spot trade leveraged crypto ETFs on MEXC. Because there is no margin required, positions will not be liquidated when the price of the underlying crypto drops. For instance, when a trader would like to purchase BTC3L (3x long of BTC), they only need to check the net value, select the proper price, and enter their purchase quantity.

• Compound-interest effect and risk limitation

The profit of the leveraged crypto ETF is automatically transferred to the principal by the system. If a user profits from their purchased leveraged ETF, their earnings will be added to the principal in the next rebalance. Rebalancing occurs on a daily basis. As a result, the user’s position in the leveraged ETF product will increase, compounding their gains. .

Additionally, a leveraged crypto ETF has an in-built risk control mechanism. For instance, if BTC falls by 33%, a BTC contract purchased with 3x leverage will be liquidated. However, the leveraged BTC3L will be rebalanced by the fund management party and while its value may decrease, it will not be liquidated.

Disclaimer:

Crypto Leveraged ETFs are an emerging financial product. The content above does not constitute investment advice. Please be aware that all investments carry risk. Trading leveraged ETFs may seem simple but inexperienced/amateur traders should be wary as cryptocurrencies can be highly volatile.

Crypto Leveraged ETFs may reduce the risk of liquidation, but in extreme conditions their price may approach zero and they may be liquidated. Please pay attention to the difference between order price and net value to avoid losses.