Just now, a friend asked me what is a margin call?

Let me give you an example! For example, if a bitcoin is 50,000 US dollars, you spend 50,000 US dollars to buy a bitcoin, which is a normal transaction.

But there is another concept, which is leveraged trading. You still buy a bitcoin, but this time you only need to pay 10%, 5,000 US dollars, and I will pay the remaining 90% for you. This is the so-called ten-fold leveraged trading.

Of course, the 45,000 I paid for you is not given for free, but lent to you, and you must pay me back later.

If Bitcoin rises to 55,000, it is a 10% increase. You sell it, pay me 45,000, and you still make a net profit of 10,000. In other words, your 5,000 principal has doubled directly.

Of course, if Bitcoin falls to 45,000, you will face a problem. The remaining value is only enough to pay back the money I lent you. So although it only fell by 10%, under the ten-fold leverage, your own 5,000 is equivalent to losing all your money.