100x leverage, 125x leverage... More and more cryptocurrency players are starting to engage in high-leverage contract transactions.

In this case, if the price of the currency rises by 1%, their assets can double, but if the price of the currency falls by 1%, they will lose everything.

This is a very risky game. The cryptocurrency world has become a dangerous casino.

The contract market is full of myths about getting rich overnight, but "99.5% of retail investors will be liquidated and eliminated."

The road of greed leads to the abyss.

1. Liquidation

For the contract players, last night was a cold night of slaughter.

Last night, the liquidation exceeded 1.7 billion dollars

Everything was so sudden. Xiao Zhang, a contract player in the cryptocurrency space, said that at that time, he received a text message from the exchange informing him that he was about to be liquidated. He quickly opened the software, preparing to close his position manually.

Almost at the same time, he received a reminder text about liquidation—over a hundred thousand yuan just vanished.

You have to pay back one day for the time spent out there.

In the cryptocurrency space, contract trading has long existed. In simple terms, it is futures trading.

Similar to the traditional futures market, the contract trading in the cryptocurrency space features two main gameplay styles: one is that players can go long or short, allowing for profits in both directions; the other is that it is leveraged, allowing players to risk a small amount to gain a large reward.

The first exchanges to enter the contract market were OKEx and BitMEX, which divided the domestic and international contract markets in their early years.

Subsequently, Huobi, Binance, MEXC, BiKi, Gate, etc., also entered the contract market one after another.

How rapidly has contract trading developed? A set of data from Non-Small Number can illustrate this directly:

In 2018, among the top ten exchanges by global trading volume, two had launched contract trading;

Today, eight out of the top ten exchanges by global trading volume have launched contract trading.

The leverage they offer is also continuously increasing, even reaching jaw-dropping levels.

Earlier, many exchanges offered contract trading leverage of 5x, 10x, and at most 20x.

Today, some exchanges are already offering leverage far exceeding this. For example, OKEx's perpetual contracts can provide up to 100x leverage, and Binance can even offer 125x leverage...

Taking Binance's 100x leverage as an example: under the premise of players going long, if the coin price rises by 1%, the asset can double; but if the coin price drops by 1%, the player will be liquidated, losing all their principal.

In the contract market, getting rich or going bankrupt often happens in an instant.

2. Gambling

What kind of players are attracted to the contract market? They all have a typical gambling mentality, often jokingly saying: "Give me leverage, and I can lose the entire planet."

"There are no 'Buddhist players' in the contract market." Xiao Zhou told a blockchain publication.

"The trading app shows the real-time profit rate of each order; after opening 100x leverage, the profit rate changes by three digits every second. The previous second could be 200%, and the next second could be 300%." he said.

In the face of such drastic fluctuations, almost all players will keep a close eye on the market. The 24/7 trading in the cryptocurrency market makes many players feel exhausted.

"When opening high-leverage contract positions, I can't sleep at all; I have to keep refreshing my phone," Xiao Zhou said.

What’s more terrifying is that those who have played contracts for a long time, just like seasoned gamblers, will develop a "heart addiction" that is hard to quit.

Two years ago, OKEx was questioned for "pulling the plug" and being unable to trade; Xiao Zhou, a contract player, was one of the victims.

"At that time, I received text messages reminding me that I was about to be liquidated. But I couldn't open the app, couldn't do anything, and could only watch myself get liquidated." Xiao Zhou recalled, "That feeling of despair is indescribable."

In order to trade cryptocurrencies, he nearly maxed out all his credit cards and faces debts of hundreds of thousands every month. "By the end, every time I opened an order and saw the numbers, I no longer felt it was my money." The year before last, in order to quit contract trading, Xiao Zhou applied to the exchange to cancel his account but was told by customer service that "there's no such service." In a fit of rage, he went to the mobile service center to cancel the phone number he had used for over a decade.

He endured for a while but ultimately couldn't hold back. Next, he registered a new trading account with a new phone number and plunged back into contract trading.

He stated that he is currently trading contracts on Binance with 125x leverage, setting take-profit and stop-loss orders in advance to avoid liquidation, "Winning or losing is just a matter of minutes."

"The volatility of the cryptocurrency market itself is already significant, and with leverage often reaching 100 times, contract trading is no different from gambling," stated blockchain researcher Xiao Wei.

"For some people, futures (contracts) = gambling." said Jiang Zhuoer, CEO of the Liebit mining pool, bluntly.

The continuous popularity of contract trading reflects a major problem in the current cryptocurrency space—there are more and more speculators buying up and down, while the steadfast "Bitcoin believers" hoarding coins are dwindling.

"I used to be a 'Bitcoin believer', just hoarding coins, not trading coins.

Some cryptocurrency players who do not engage in contracts believe that it is precisely the proliferation of contract trading that has led to a large amount of capital being invested in high-leverage gambling games.

In the face of high-leverage contract trading, the vast majority of retail investors in the cryptocurrency space will become collateral damage.

"Many players mistakenly believe that as long as they beat 50% of the people, they can make money in the contract market," Xiao Wei said, "But the truth is that what they need to beat is not 50% of the people, but 50% of the capital. Behind 50% of the capital, there may be 98% of the people."

In his view, under high leverage, a player's assets can increase tenfold overnight or drop to zero in an instant. The apparent balance of profit and risk is not actually equal.

"When the market is good, many players close their positions early for a profit before their assets can appreciate tenfold. When the market is bad, they often hold onto their coins, waiting for them to go to zero." He explained, "The investment psychology of retail investors determines that they cannot profit in the contract market in the long run."

"99.5%-99.9% of retail investors will be liquidated in the contract market." Jiang Zhuoer summarized, "Playing contracts is no different from gambling or drug use; many players won't stop until they lose all their assets. So why are exchanges so keen on the contract trading market?

The answer is simple—contract trading is more profitable.

In the trading market, the trading volume of contracts is much larger than that of the spot market.

"The greed of players has led to more and more tricks from exchanges. And these tricks further exacerbate the greed of players."

It's a choice between getting rich overnight or losing everything overnight; for those who are not afraid of losing, contracts may be an opportunity to turn things around, while for those at a moderate wealth level, hoarding coins is still a safer option.

Time never speaks, yet answers all questions.

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