What triggers a margin call in the world of cryptocurrency?

3 answers

• Dec 26, 2021 · 3 years ago
  A margin call in the world of cryptocurrency can be triggered when the value of the assets held as collateral for a margin trade falls below a certain threshold. This threshold is set by the exchange or platform where the trade is taking place. When the value of the collateral drops below this threshold, the exchange will issue a margin call to the trader, requiring them to either deposit additional funds or close their position to cover the potential losses. Margin calls are designed to protect both the trader and the exchange from excessive risk.
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• Dec 26, 2021 · 3 years ago
  Margin calls in cryptocurrency trading can also be triggered by high volatility in the market. If the price of the cryptocurrency being traded experiences sudden and significant fluctuations, it can lead to a rapid decrease in the value of the collateral. This can result in the margin call being triggered, as the exchange wants to ensure that the trader has enough funds to cover potential losses in such volatile conditions.
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• Dec 26, 2021 · 3 years ago
  At BYDFi, a margin call can be triggered when the value of the collateral falls below 150% of the borrowed amount. This is to ensure that there is enough cushion to cover potential losses and protect both the trader and the platform. If a margin call is triggered, the trader will be notified and given a certain period of time to either add more collateral or close their position. Failure to do so may result in the platform liquidating the position to cover the losses.
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