Leveraged ETFs are similar to spot leverages in that they make profits by judging the rise or fall of the anchor token.
[Bullish]: Take BTC as an example, use 10000USDT to buy BTC three times as long as an ETF product: BTC3L. When the value of BTC increases by 10%, the net value of BTC3L you hold will increase by about 30%, and your total assets will rise to approximately 13000USDT, compared to buying BTC directly can generate an additional 2000USDT profit.
[Bearish]: Take BTC as an example, use 10000USDT to buy BTC three times short ETF products: BTC3S, when the BTC price drops 10%, the net value of BTC3S you hold will increase by about 30%, and your total assets will rise to about 13000USDT.
However, always pay attention to risks when using leverage. If the market moves in the opposite direction after buying a leveraged ETF, his loss will usually be 3 times as well. For example, if he buys a 3 times long ETF, and BTC drops by 10% after 1 day, then 10000USDT will be reduced to 7000USDT. But if it drops by 20% or more, the loss will not exceed 60%.
Therefore, users need to make accurate judgments on the subject to achieve profitability.
Even under extreme conditions, leveraged ETFs will not be liquidated. For this, please refer to the relevant content of the ETF's "rebalancing mechanism".
Disclaimer: Leveraged ETFs are emerging financial derivatives. The above does not constitute investment advice. Please pay attention to risk control. Leveraged ETFs greatly reduce the risk of strong liquidation, but in extreme conditions, there will be risks of approaching zeroing and liquidation. Please pay attention to the difference between net value and price to avoid suffering losses.