How Leverage Can Help With Bitcoin’s Price Discovery

Bitcoin (BTC) is like any other asset class in that it captures value through organic price discovery conducted via trading activity on global exchanges.

Yet leverage and margin trading, in general, can help “turbo-charge” demand for an asset. They can also free up capital, thus increasing liquidity within a given market as traders look to use their capital elsewhere.

It’s an investment strategy of using borrowed money for the use of various financial tools to increase the potential return of an investment.   

It’s also an efficient use of trading capital, valued by professionals because it allows them to trade large positions without committing 100 percent of their capital to a risky spot position.

For example, a trader that wanted to buy a thousand tokens at $1 apiece would only require a $100 of trading capital, depending on the leverage used, thereby leaving the remaining $900 available for additional trades.

Why leverage matters for bitcoin

Often…