Dec 2, 2024: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

 explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

Weekly Highlight — U.S. Economy Growth Driven by Improved Productivity

If U.S. economic growth is strong, why is the Federal Reserve considering interest rate cuts? This question was recently posed to Fed Chair Jerome Powell. Instead of focusing solely on the Fed's actions, we should explore the reasons behind the robust growth, and see how it can be sustained.

Real GDP is expected to exceed pre-pandemic levels for the second consecutive year. Typically, strong growth raises concerns about overheating, but inflation has actually fallen. Recent growth is largely due to increased productivity and a growing workforce, which are not inflationary and can help rebalance supply and demand.

A significant factor behind this success is the rise in labor productivity, averaging 2.3% over the past two years — faster than the four years before the pandemic. This uptick is linked to a surge in new business applications, especially in the tech sector, as the pandemic's economic shifts and relief measures lowered barriers to entrepreneurship, particularly benefiting underrepresented groups.

The boost in productivity also reflects workers moving to roles better suited to their skills, a trend accelerated by the 

. This mobility has been essential for productivity gains, as higher job turnover correlates with increased business dynamism.

However, sustaining higher productivity is a challenge. The Fed must avoid overly restricting the economy, as high interest rates can deter investment in technology. Additionally, a gradual cooling of the labor market, with declining job quits, is concerning.

For policymakers, monitoring labor market dynamics and business formation is crucial. If these indicators decline, productivity and growth could wane. The U.S. economy has made significant progress, and maintaining this momentum is essential.

Weekly Crypto Highlight — Sui Is Poised for Growth

Bybit has released the Sui ecosystem report, with its key takeaways below. (Read the full report 

: Sui has achieved impressive performance, processing over 297,000 transactions per second (TPS) while maintaining low latency. This positions it among the fastest blockchains available.

: In 2024, Sui's market capitalization skyrocketed over 1,000%, reaching $9.5 billion and reflecting strong investor confidence and growing adoption.

: The total value locked (TVL) in Sui’s DeFi ecosystem has surpassed $1.5 billion, ranking it 11th among major blockchain networks and highlighting its rapid growth in 

: The launch of the Grayscale Sui Trust has significantly increased institutional interest, resulting in an 89% price surge for the SUI token in Q3 2024, indicating its appeal to accredited investors.

: Sui is making strides in the gaming sector, introducing the SuiPlay0X1 handheld gaming device and various 

, enhancing user engagement and expanding its ecosystem.

Developed by Mysten Labs, Sui is a Layer 1 

 (PoS) blockchain launched on May 3, 2023. Its object-centric data model allows for parallel transaction processing, enhancing throughput and reducing latency. Its use of the Move programming language ensures resource safety through rigorous bytecode verification, mitigating common blockchain vulnerabilities.

: Partnerships with firms like Copper and Zero Hash strengthen Sui’s infrastructure and credibility in the financial sector, enhancing its offerings in digital asset custody and transaction facilitation.

: Sui’s DeFi sector is thriving, with leading protocols like 

 offering diverse financial services. In gaming, initiatives such as the SuiPlay0X1 device and various web3 projects bolster user engagement.

In summary, Sui is poised for continued growth, driven by technological innovations that are expanding its presence in both DeFi and gaming.

Advanced

Bybit Institutional_Weekly Poster (36).png

Weekly Institutional Insights: Sui Poised for Growth; U.S. Economy Driven by Productivity Growth

Chill Guy is a viral meme illustration that took social media by storm before a crypto project used the meme to launch a Solana-based token. Learn more here.

What started as a simple illustration of a laid-back dog has become a global meme sensation, with the cartoon character known as Chill Guy dominating both social media trends and cryptocurrency markets. Created by artist Phillip Banks in October 2023, the easygoing canine character sparked a viral movement that has attracted major brands worldwide.

This article follows Chill Guy’s transformation from a social media sensation to a cryptocurrency asset. We'll examine its viral beginnings, community growth, market impact and what potential investors can expect from CHILLGUY in the future.

 is a viral meme illustration by artist Phillip Banks, depicting a laid-back dog in casual clothes whose easygoing attitude took social media by storm before a crypto project used the meme to launch Just a Chill Guy as a Solana-based token.

What Does Just a Chill Guy Aim to Achieve?

The CHILLGUY meme coin aims to spread a "Why worry?" philosophy into cryptocurrency markets by embracing the laid-back, stress-free attitude that made the original meme go viral. The project transforms this easygoing vibe into a community-driven token, where being low-key isn't just a catchphrase — it's a shared mindset among holders.

The CHILLGUY community brings this philosophy to life by sharing endless variations of the CHILLGUY meme across social platforms. Through market swings and viral trends, CHILLGUY keeps his iconic pose: hands in pockets, subtle smirk, perpetually relaxed.

Just a Chill Guy (CHILLGUY) operates as a Solana Program Library (SPL) token on the 

 blockchain, leveraging the network's ultrafast speeds and low costs to ensure smooth trading. The token was created using Pump.fun, a specialized platform that lets users launch Solana-based tokens without any fees, removing traditional barriers to token creation.

CHILLGUY is a community takeover (CTO), meaning it's completely owned and directed by its token holders with no central team in control. This decentralized structure ensures the project stays true to its community-driven nature, its holders collectively guiding its future while embodying the laid-back spirit of the original meme.

The CHILLGUY token launched with a maximum supply of 1 billion tokens, of which 999,965,435 are currently in circulation. This near-complete distribution of tokens to the market supports active trading and community participation.

What makes CHILLGUY's tokenomics particularly notable is its widespread distribution across more than 142,000 unique holders (as of Nov 27, 2024), achieved in just 12 days. This rapid expansion of its holder base demonstrates strong community adoption and aligns with the project's decentralized, community-driven principles.

CHILLGUY has exploded across social media, especially on TikTok, where the meme has amassed hundreds of millions of views. Its laid-back character resonates with users worldwide, inspiring countless creative adaptations.

Major brands worldwide have embraced CHILLGUY in their marketing campaigns. From Sprite Europe to NFL on CBS, the character has resonated across mainstream media, even catching the attention of global figures like El Salvador's president Nayib Bukele.

The “Chill Guy” meme’s influence spans multiple social media platforms, with a growing community of followers: 96.6K on X (

). On the other hand, the meme token itself also has a vast community, with 39.9K on X (

) and an active Telegram channel of over 15,000 members. These numbers reflect the meme's ability to engage audiences across different platforms.

The token's popularity in cryptocurrency markets matches its social media success, with CHILLGUY maintaining a substantial 24-hour trading volume of over $330.03M as of Nov 27, 2024. This high trading activity demonstrates the strong market interest in CHILLGUY beyond its meme status.

Looking to trade Just a Chill Guy tokens? Bybit now offers the CHILLGUY/USDT Spot trading pair and CHILLGUYUSDT Perpetual contract. To get started, you’ll first need to create a Bybit account, then fund it with cryptocurrency and navigate to the 

While CHILLGUY has maintained strong trading volumes and continues gaining mainstream attention through its viral social media presence, investors should carefully weigh its strengths and risk factors before making investment decisions.

With its widespread brand adoption, sustained trading activity and explosive community growth of over 142,000 holders, CHILLGUY demonstrates significant market potential. However, meme coins are inherently volatile. Potential investors should 

 and invest no more than they can afford to lose.

CHILLGUY is the latest viral sensation to harness the power of the attention economy to convert social media momentum into crypto market success. While CHILLGUY has already demonstrated its ability to capture mass appeal, its position as a leading meme token will depend upon how effectively it maintains its cultural relevance and community engagement in this fast-moving market.

Intermediate

chill guy, chillguy.png

Just a Chill Guy (CHILLGUY): Embracing the Art of Nonchalance

Zircuit (ZRC) combines optimistic and ZK rollups with AI-driven security, offering fast, low-cost Ethereum Layer 2 solutions. 

 network has flourished, mainly due to the ongoing network congestion, high fees and poor scalability of the latter. Many of these platforms use rollup technology, whereby batches of multiple transactions processed off-chain are bundled together and posted in bulk to the underlying Layer 1. Ethereum-linked rollups mainly come in two varieties 

 (ZK). While optimistic rollups boast lower computational overhead, the ZK variety of these networks features a higher degree of security.

Zircuit (ZRC) is a Layer 2 chain that adopts a hybrid approach, combining the elements of optimistic and 

. This lets the platform offer the performance benefits of optimistic technology along with the security of ZK validity proofs. To further enhance overall security, Zircuit uses a unique 

 (AI)–driven system of monitoring for malicious transactions.

 (ZRC) is a hybrid Layer 2 blockchain that combines the features of optimistic and ZK rollups, and uses AI-driven monitoring for potentially harmful transactions. 

 rollup development technology, a popular framework for building optimistic rollup networks. Additionally, it uses zero-knowledge proofs, which lets the platform offer the best of both worlds 

 the performance benefits of optimistic rollups and the security of ZK technology. Zircuit is 

The Zircuit project takes security very seriously, and has introduced a unique system of AI-based protection against malicious transactions at the sequencer node level. The use of ZK proofs and an AI-based protection system make Zircuit one of the most secure platforms in the competitive world of Ethereum Layer 2 chains.

Along with its excellent security benefits, Zircuit also boasts low costs, fast transactions, excellent scalability and 2-second block production intervals. All these features make it an ideal environment for 

 (DApps) in various niches, particularly 

 (DeFi). In fact, the leading protocols within the Zircuit ecosystem are all dedicated to the finance niche, with Zircuit Staking being the largest application by TVL.

With its heavy focus on DeFi, Zircuit aims to become a leading liquidity hub for various token types within the sector, including 

. These assets can be staked through the Zircuit staking program — supported by the platform's Liquidity Hub — to earn staking APRs, airdrop rewards and points based on the Zircuit Point program (covered further in our article).

The platform also operates a secure native bridging solution, 

, to help users transfer assets between its Layer 2 network and Ethereum Layer 1.

The company behind the project, Zircuit Ltd., was founded in 2021 in Canada by Dr. Martin Derka, Jan Gorzny and Angel Xu. Zircuit's testnet was launched in November 2023, but made headlines in April 2024 when the project reported that its 

 (TVL) had soared past $2 billion. While testnet TVLs are more a gauge of future potential for a blockchain than an indicator of its existing worth, the news attracted the attention of industry observers toward the platform. Following its highly publicized testnet success, Zircuit launched the first phase of its mainnet in August 2024. This was followed by the launch of the platform's native token, ZRC, in November 2024.

As a typical rollup, Zircuit uses an off-chain sequencer node to batch and organize Layer 2 transactions for subsequent posting to the underlying Ethereum Layer 1. The batches have ZK validity proofs attached to them to signal to Layer 1 validators that they’re free from fraudulent transactions. Zircuit's architecture also includes prover nodes, whose job is to produce these validity proofs.

However, unlike other rollups using ZK proofs (also known as validity proofs), Zircuit doesn't generate validity proofs for every block of transactions. Instead, some blocks have pre-generated template proofs, while others go through the process of having a dedicated validity proof created for them. After a few blocks featuring validity proofs, there are several more that utilize template proofs. The image below illustrates this approach.

The key reason Zircuit has adopted this form of proof design is that the process of generating ZK proofs is computationally intensive. By using template proofs for some of the blocks in a sequence, Zircuit can reduce the overall computational overhead. However, the project’s team has stated that the template proof model is temporary, and will be phased out in the future. At that stage, the platform will move to generating ZK proofs for each block.

Zircuit features a highly modular design whereby provers — responsible for generating validity proofs on the platform — can easily be plugged into or removed from the network. This modular approach is distinct from the standard ZK rollup design, in which provers are more tightly and less flexibly integrated into the overall architecture.

As noted earlier, Zircuit uses a dedicated sequencer to organize and batch transactions into blocks. The platform also applies AI-driven monitoring at the sequencer level (the Sequencer Level Security, or SLS) to spot and exclude fraudulent transactions before they’re finalized on Layer 2.

When transactions are first posted to Zircuit, they enter the 

 — a temporary area from which the sequencer picks and organizes individual transactions into blocks. The mempool is being monitored at all times, using AI algorithms to identify suspicious transactions. If a transaction in the mempool raises a flag, it's quarantined and assessed for validity before the sequencer can include it in a block. The image below shows how this process works.

One of the distinct features of Zircuit is its hybrid architecture, which combines the properties of optimistic and ZK rollups. At the base level, Zircuit is built using Optimism's Bedrock development framework, a technology popular for optimistic rollup networks. However, the use of ZK proofs — or, to be more precise, a combination of validity proofs and template proofs — ensures that Zircuit enjoys a security level that standard optimistic rollups normally can't match.

The use of AI-based SLS provides robust security to Zircuit, complementing the already highly secure ZK proof system. Very few Layer 2 networks in the industry currently feature anything similar, making the platform a true pioneer of AI use for sequencer-level operations.

Like any rollup based on Optimism Bedrock, Zircuit enjoys EVM compatibility. This allows for smooth interoperability with the underlying Ethereum Layer 1. EVM compatibility also makes it easy for developers familiar with Ethereum’s environment to develop Zircuit-based DApps, or to port existing Ethereum applications to the platform. Developers can take advantage of technologies commonly used for Ethereum (e.g., the Solidity programming language and the Hardhat development framework) to build Zircuit applications and smart contracts.

Zircuit Bridge is a native bridging solution designed to easily transfer tokens between Ethereum and Zircuit. It boasts high security, low transaction fees and fast transfers, and allows users to move a variety of cryptocurrencies between Ethereum and Zircuit, including ETH, 

) and LRTs like Super Symbiotic LRT (weETHs). As of late November 2024, the total number of cryptos supported by the bridge is close to 30.

Zircuit has launched a reward program called Zircuit Points. Users can earn these Points by staking supported assets, and by participating in the Build to Earn initiative (more on this below). Accumulated points will be converted to ZRC tokens in the future. Points also create the opportunity to qualify for token airdrops.

The primary way for most users to earn Zircuit points is via 

. The Zircuit Staking program lets you stake LSTs, LRTs, popular stablecoins, some wrapped tokens and Ether (ETH) to earn points. Using LSTs and LRTs, you can earn yields (along with native Zircuit staking APRs and Points) from the respective staking and restaking platforms that issue these assets.

Zircuit Points earned via staking have different multipliers, depending upon the asset. For example, Ether has a multiplier of 0.5, while LSTs, LRTs and stablecoins have a multiplier of 1. Multipliers for different LST and LRT assets may be subject to change in the future.

Build to Earn is another way to qualify for Zircuit Points. The program allows developers to contribute to the Zircuit ecosystem and earn Points in a number of ways, including:

Launched in November 2024, ZRC is the platform's native cryptocurrency. It's an 

 asset deployed on both Zircuit and Ethereum Layer 1. ZRC is mainly used for reward distributions, and participation in token airdrops for ecosystem DApps. Currently, transaction fees on the network are paid in Ether. It's possible that, in the future, ZRC might be used for some transaction fee payments.

ZRC is also used for rewards under the Gas Rebate program. As users conduct transactions on the platform, they 

. Zircuit’s Gas Rebate program provides rebates to offset some of the incurred fees. The amount of ZRC earned as a rebate is proportional to the amount spent on gas in ETH; the project's documentation states that for each ETH spent on gas, the user earns 125% in ZRC. All kinds of gas fee payments qualify for the rebate, including ordinary asset transfers and transactions involving interaction with Zircuit DApps.

ZRC is a supply-capped token, with a maximum and total supply of 10 billion. The token's supply allocation shares are as follows:

The ZRC token is available on Bybit's Spot market as a swap pair with USDT (

 to grab a share of the 5 million ZRC prize pool. New users who sign up for a Bybit account and complete identity verification can earn ZRC rewards by accumulating a deposit volume of at least 2,000 ZRC, or by depositing 100 USDT and trading 100 USDT worth of ZRC via their first trade with Bybit. 

Meanwhile, existing users can qualify for ZRC rewards by trading at least 500 USDT worth of ZRC on the Bybit Spot market, with the possibility of earning up to 10,000 ZRC based on trading volume. The 

 event will run through Dec 10, 2024, 8:59AM UTC.

Zircuit is among the pioneering Layer 2 platforms to adopt a hybrid design for a rollup network. Thanks to the platform's architecture, users can take advantage of low transaction costs, fast transfers and great scalability while enjoying the benefits of high security delivered by ZK proofs and AI-driven mempool monitoring. AI-based monitoring for fraudulent transactions is a particularly notable feature of the platform and is undoubtedly among the most advanced technologies employed in the blockchain industry.

User security combined with faster and cheaper transactions for the Ethereum network — all in one package — is now feasible, thanks to Zircuit's innovative technology and unique approach!

Zircuit.png

What Is Zircuit (ZRC): Where Performance Meets Cutting-Edge Security

Bybit is celebrating its sixth anniversary with the #Super6Bybit event, offering a $1.2 million prize pool and focusing on its bbSOL token.

Daily Top Performer — Virtuals Protocol (VIRTUAL)

On Wednesday, the S&P 500 fell 0.38% as tech stocks dropped and inflation data reinforced a hawkish Fed outlook. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.40%, with Bitcoin and Ether dropping by 1.86% and 1.79%, respectively in the past 24 hours.

Today's top performer is VIRTUAL, which surged 53.6% following the launch of the $MUSIC token by Agentstarter, featuring AI-driven music video capabilities and community-focused tokenomics.

Virtuals Protocol (VIRTUAL), founded in 2021, allows users to invest in and co-own AI-driven virtual assets like companions and influencers. Its model fosters community ownership, transforming AI agents into revenue-generating assets across platforms like Roblox and TikTok. The platform attracts contributors from AI and gaming to drive innovation in virtual economies. 

, using AI to create music videos and offering features like animated videos, voice mimicry, and karaoke tracks. The tokenomics allocate 60% for airdrops, 20% for liquidity, and 10% each for the development team and Virtuals Protocol.

Check Out the Latest Prices, Charts, and Data of 

Bybit is celebrating its sixth anniversary with the 

, offering a $1.2 million prize pool and focusing on its bbSOL token. Launched in September 2024, bbSOL is the first exchange-backed Liquid Staking Token on Solana, providing liquidity and staking rewards. The campaign, running from November 28, 2024, to January 6, 2025, invites participants to build, transform, and supercharge their bbSOL through tasks, leaderboards, and community milestones, increasing rewards. The event combines gaming mechanics, community engagement, and opportunities to win prizes while promoting innovation and growth in the crypto space.

Yesterday, there were no flows in BTC Spot ETFs, including GBTC and non-GBTC categories.

. Stake BNB on Lista's portal to get slisBNB, then deposit it into Astherus to earn airdrop points with multipliers (3X for Lista, 1.15X for Astherus). No lockup is required, and slisBNB is the most efficient option.

Beginner

1.png

Bybit Celebrates 6th Anniversary with $1.2M Prize Pool and bbSOL Supercharging Campaign

Bybit Learn

Trading

Intending to trade leveraged tokens? Read this article to find out exactly how you can avoid the top five mistakes that other crypto traders often make.

A variety of financial instruments can help you gain leverage when trading crypto, but none of them are as simple as a leveraged token. This article helps explain the concept and offers advice on 

Leveraged tokens are a financial product that tracks the price movements of an underlying asset. The tracking is done using derivative instruments to ultimately multiply your earnings.

Leveraged tokens are becoming popular because they let you trade with leverage without worrying about margin calls, liquidation risk and loans from your broker. In addition, you can trade them as easily as other coins.

 is an example of a leveraged token. The "3X" indicates the leverage, which means that your assets are multiplied by three if ETH3L increases in value. However, it's a double-edged sword because you can also lose value quickly as well. For every 1% drop in ETH, ETH3L also decreases by 3%.

There are all kinds of leveraged tokens. For instance, if you're anticipating a drop in the price of ETH, you can buy a 

. In this case, ETH3S Token will give you three times leverage if the price of Ethereum starts to fall.

Depending on the crypto exchange, the trading symbol may differ slightly. Accordingly, here are a few other examples of leveraged tokens:

You may also come across leveraged tokens that have different margin ratios — for example, HALF (1/2X) and HEDGE (-1X).

Understanding the difference between a leveraged token and a 

 will help you appreciate the need to introduce leveraged tokens in the market.

Traditionally, investors have used derivatives to take leveraged positions in the market. In a way, this lets you open a much larger position than your account allows. To trade a derivative, you borrow funds from the broker. In this setup, you must keep an eye on margin requirements and the risk of liquidation because the position is based on borrowed money.

In contrast, leveraged tokens don’t require collateral. You can buy and sell a leveraged token as easily as any other cryptocurrency without worrying about liquidation and margin requirements.

A leveraged token manages liquidation risk using a dynamic rebalancing mechanism, which compounds profits. The profit is automatically reinvested into the underlying asset. Similarly, it sells some of the profit when the price drops. This rebalancing act nullifies any risk of liquidation.

Since you don’t borrow anything from the broker, there’s no need to worry about maintaining a specific margin. 

A leveraged token is like a crypto trading fund where investors keep their money. At the end of the day, the fund rebalances itself to maintain a target leverage exposure and ensure that there's no liquidation risk. This is known as the regular rebalancing mechanism. However, in the case of Bybit, the fund rebalances itself when the leverage hits -4X, -2X, 2X or 4X. This is referred to as an irregular rebalancing mechanism.

In the case of a 3X token, if the token is profitable on a given day it will reinvest its profits in the underlying asset. This is similar to compounding. If it has losses on a given day, it will sell off some of its positions to reduce its leverage back to 3X to avoid liquidation.

In extremely volatile situations, the leveraged token can also rebalance itself intraday. For example, it usually requires a 33% adverse move to liquidate a 3X token. If the situation demands it, the 3X token can perform an intraday rebalancing act when the price moves between 6% and 12% in the opposite direction. The intraday rebalancing helps reduce the risk of liquidation by returning the token to 3X leverage.

Top Mistakes to Avoid When Trading Leveraged Tokens

There’s little doubt that leveraged tokens are some of the most misunderstood products in the industry. While leveraged tokens are suitable for anyone willing to take the extra risk, there’s more to them than meets the eye.

If you want to trade leveraged tokens, avoid these top 5 common mistakes.

Leveraged tokens are not intended for long-term investment. Instead, they're more suitable for short-term investment and trend-trading. Holding them for long periods will expose you to greater risk.

It's quite common for crypto traders to ignore the basic math associated with leveraged tokens. For instance, in the event of consecutive losses, a leveraged token needs a return greater than its loss to break even.

Impact of Holding Leveraged Tokens Long-Term

If you're holding a leveraged token long-term, be sure you understand that it will behave poorly as compared to a typical margin position. If a 3X leveraged token loses 10% daily for three days, the total loss is 90% (30% x 3 = 90%). In other words, you’ll require a 1,000% return to recover that loss.

, cut losses quickly and control risk exposure.

Neglecting the Effects of Volatility Decay

Volatility decay is the accumulated decrease in the 

 portfolio of an investor due to the frequent ups and downs in the market. Since markets are non-trending in nature, you need to consider volatility decay when trading leveraged tokens.

When trading leveraged tokens, most traders don't take volatility decay seriously because they're used to trading typical financial instruments. As a result, it's surprising for them when their leveraged token underperforms despite a slight uptick in the market.

Impact of Neglecting the Effects of Volatility Decay

As discussed, a typical 3X leveraged token will perform well in a trending market because there is no volatility decay. However, it can misfire in fluctuating markets.

Suppose you invest $100 in a crypto which gains 10% on the first day and loses 10% the next day. In this case, the value of the 3X leveraged token is $130 on the first day because it gained 30%. The following day, the value will decrease to $91 because the price was reduced by 30% ($130 − 30% = $91).

If you were to hold a normal crypto account, it would perform better because it reached $110 the first day, and finished up 10% lower at ($110 − 10%) = $99 the next day.

Theoretically, there’s not much you can do to avoid volatility decay because it's an intrinsic part of any leveraged financial instrument. To prevent such risks, it's recommended you trade leveraged tokens when markets are trending and nonvolatile.

A leveraged token rebalances its portfolio either at the end of the trading day or once the leverage hits -4X, -2X, 2X or 4X. New traders often disregard the rebalancing mechanism.

A lot of new traders fail to see leveraged tokens as a portfolio that must maintain its leverage at each stage. They forget that if tokens are held for a very long period, the continuous rebalancing act will ultimately lead to losses.

Impact of Disregarding the Effects of Rebalancing

A leveraged token increases or decreases its exposure according to the rise and fall in the value of the underlying asset. 

In an ideal scenario of irregular rebalancing, when you're trading in a trending market or you're holding the token for a couple of weeks, there will be fewer instances of rebalancing.

In the long run, the token is exposed to various volatile market conditions that can trigger multiple rebalancing acts. Therefore, investors holding the token for an even longer period of time may experience a dramatic rise or fall in their investment.

In an ideal scenario of regular rebalancing where rebalancing happens at the end of the day, there will be fewer rebalancing acts when you hold the token for just a few days.

However, over the course of a few days, the various volatile market conditions can potentially trigger multiple rebalancing acts, resulting in token holders experiencing sharp increases or decreases in their investment.

To avoid risk, only hold a leveraged token when you're sure that the market will trend in a certain direction. In this scenario, you're likely to experience exceptional returns without facing adverse conditions.

Risk management and control are essential for successful trading. In adverse trading conditions, it's wise to close your losing positions when necessary.

Most new traders don’t change their style when trading leveraged tokens. They often let losers run, waiting for the momentum to turn in their direction. While this holding pattern is justified for long-term investments in traditional markets, it can quickly doom your investment when trading leveraged tokens.

When trading leveraged tokens, the impact of loss is magnified because you require greater returns to recoup your losses. To understand this phenomenon, let's run a comparison between a normal account and a 3X leveraged account.

In a typical account, which experiences a 10% loss for three consecutive days, you’ll see a 30% decline in your portfolio. Using $1,000 as an example, a loss of 30% will result in your having $700 left. In order to recoup the 30% loss, you would need a return of 43%. This isn't the case with leveraged tokens.

When trading 3X leveraged tokens (as explained above), you need a return of 1,000% in order to recoup 90% (30% loss daily x 3 = 90%) of your losses. Accordingly, it will take more effort to regain your initial investment.

In an event of losses, a leveraged token needs a return greater than the loss to break even.

If you're not sure about the trend or the future direction of the market, try to hedge your position during adverse conditions.

Trend trading is designed to take advantage of market trends. It's based on the idea that markets have an element of predictability that allows traders to accurately predict price movements in the short run. Some traders ignore the existing trend, which can ultimately lead to a loss.

When trading leveraged tokens, it's common for investors to rely on long-term fundamentals. However, this mindset isn’t conducive to trading leveraged financial instruments. Instead, leveraged tokes are better suited to swing trades and intraday trades.

If you're not using trend trading, your leveraged positions are exposed to risks from price fluctuations, volatility, rebalancing and transaction fees. The negative impact of these elements offsets any gains you're likely to enjoy.

Try to trade during a trending market. You can either wait for the confirmation of the trend, or enter a market when there’s a high probability of a breakthrough. In any case, stay away from a ranging market because it's counterproductive.

Leveraged tokens are designed to take advantage of short-term trends in the market. If used as intended, leveraged tokens can quickly offer tremendous gains in a very short time span. They're simple and extremely effective.

Despite their attraction, they’re not for the faint of heart. Therefore, before trading leveraged tokens, avoid common mistakes by having both risk-mitigating trading strategies and an exit plan. 

Top 5 Mistakes to Avoid When Trading Leveraged Tokens

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards