The crypto space loves to romanticize leverage. You’ll hear people talk about perpetual contracts, liquidation prices, and borrowing crypto like it’s a rite of passage. But here’s the hard truth: unless you’re a professional trader or part of a firm that does this for a living, using leverage in crypto is a shortcut to disaster.

Let’s unpack why.

What is leverage?

Leverage means borrowing money to increase the size of your trade. If you only have $1.000 but want to trade $10.000 worth of Bitcoin, you can use 10x leverage. Sounds exciting, right? It’s also extremely risky.

What are perpetual contracts?

Perpetual contracts are a type of derivative that lets you speculate on the price of crypto assets without owning them. Unlike traditional futures contracts, perpetuals don’t have an expiration date. But they do come with fees, and very real consequences.

What is liquidation?

Liquidation happens when the market moves against your leveraged position so much that your collateral can’t cover your losses. The exchange forcibly closes your trade, and you lose your money. It’s not a paper loss, it’s game over.

Borrowing to buy crypto

Some platforms even let you borrow crypto to open bigger positions. It’s the financial equivalent of taking out a loan to bet on horse racing, and the horse is drunk.

The real cost of leverage

Let’s say you’re using 10x leverage. A 10% price drop wipes you out completely. In crypto, that can happen in an hour. Even with 3x leverage, a modest market dip can lead to forced liquidation. It’s not about being wrong long-term, it’s about surviving short-term.

And the liquidation price? That’s the price point where your position is automatically closed. You don’t get to choose. There’s no “HODLing” your way out of this.

Buying vs. leveraging: the simple truth
Let’s compare.

• If you buy 1 Bitcoin: No matter what the market does, you still own 1 Bitcoin. Price down? Hold. Price up? Sell. You’re in control.
• If you go long with 10x leverage: A 10% drop and it’s gone. Not your Bitcoin, not your money. Just gone.

Buying crypto is owning an asset. Leveraging crypto is renting a grenade.

Leverage is not a strategy; it’s a gamble

Unless you’re an expert in trading, using leverage is like borrowing money to buy burgers because you think the price of beef will go up.

Would you take out a loan to place a bet in roulette? Would you mortgage your house to guess the next TikTok trend? That’s what leveraging without expertise looks like.

The smarter play: buy, hold, speculate responsibly
Speculation is part of investing. Even long-term holders are speculating, just on longer timeframes. And that’s okay. But don’t confuse smart speculation with high-risk gambling.

If you believe in crypto’s long-term future, just buy the asset. Yes, it might drop. But if you don’t sell, you don’t lose. You only lose when you’re forced to, and leverage guarantees you will be, eventually.

Conclusion: simplify your crypto strategy
Crypto is already volatile. Don’t make it harder. Don’t borrow money you can’t afford to lose. Don’t bet on short-term swings if you don’t live and breathe technical analysis.

Just buy, hold, and breathe. You don’t need to play the leverage game to build long-term wealth. You just need to stay in the game.

That’s also why FOHLE Finance doesn’t offer leverage. Our focus is on real users, not degens or traders. We’re building tools for people who want to buy, hold, swap, and grow safely in a decentralized world, without unnecessary risk.

FOHLE Finance. In your POCKET, under CONTROL.