The reason for the market downturn is that many people are entering the market without their own money and using high leverage, hoping to make quick profits. However, this makes the market easier to manipulate. Those who take high leverage are more vulnerable, making it easier for others to take their money compared to those using smaller leverage or just investing.
These traders with high leverage contribute to market crashes. I've seen people complaining about their losses, but they donât realize that their actions are part of the problem. Leverage doesn't increase the actual trading portfolio; it only amplifies profits and losses. Short sellers target coins with high leverage and push the price down, causing a "leverage hunt." When leveraged positions are wiped out, the market drops.
Once both real trading money and leveraged money (which isn't actual money) are removed from the market, prices fall. In simple terms, the overuse of leveraged money drives the market up, but when itâs removed, the market goes down.
This is why I mentioned that traders with little money using high leverage are partly responsible for market downturns.
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