Crypto Margin Trading: Collateral, Leverage and Liquidation

Margin is collateral supporting a position or account. Spot margin can involve an actual asset loan and borrowing interest. A derivative creates contractual price exposure without necessarily borrowing the underlying asset. Collateral borrowing, funding and other charges depend on the product and account.

Leverage compares exposure with the collateral supporting it. With fixed collateral, higher leverage can fund a larger position; with fixed position size, less collateral means a smaller margin buffer. Those are different comparisons. This guide's arithmetic concerns a simplified linear long derivative, not every spot-loan, inverse or portfolio-margin arrangement.

Read the actual account and contract rules. A displayed estimate is conditional on the inputs used to calculate it.

All amounts below use the same hypothetical quote units. Entry is 100 and initial collateral is 10 in every row, so increasing leverage increases position size. Maintenance is fixed at 0.5% of ENTRY notional for this illustration. Quantity stays unchanged after entry. The model excludes fees, funding, other positions, tier changes and collateral moves. Real venues may use mark notional or account-level calculations.

Isolated margin assigns collateral to a position or defined group. Manual additions and enabled automatic replenishment can commit more funds. Costs and applicable account protections affect final loss. The word isolated does not establish a permanent loss cap equal to the first deposit.

Cross margin shares eligible collateral across covered positions. Other gains can support the pool and other losses or requirements can consume it. A larger usable buffer may move a threshold for an otherwise unchanged position; the mode name alone does not guarantee a more distant threshold. Portfolio margin is a separate risk-based arrangement.

A margin warning or request for collateral and liquidation are different events. A warning may arrive late or not at all. The venue can reduce or close positions under its maintenance rules without a guaranteed grace period. The trigger reference may differ from the last traded price and from the stop order's reference.

Mark price, maintenance threshold, zero equity and actual execution price have different roles. Insurance funds, liquidation charges, partial reductions, auto-deleveraging and account protections vary by product and jurisdiction. Do not assume every liquidation loses precisely the assigned margin, or that every account has the same protection against a negative balance.

Use the current contract and account specifications. A published rate alone is insufficient to reproduce a liquidation estimate.

A planned loss calculation is one input. It does not establish a maximum loss or prove that the position can remain open until the stop.

Check the product's eligibility and current rules before acting. Source rules reviewed on 2026-09-11: Bybit, Bybit and Bybit. These documents describe one venue's account and execution arrangements; they are not universal exchange rules or a promise of availability.

For simple interest with an unchanged balance and rate: interest = borrowed amount × rate per period × number of periods. A hypothetical 5,000 units × 0.05% × 12 periods equals 30 units. This excludes compounding, repayments and balance changes; it is not a current venue rate. Actual billing can prorate or round partial periods, change rates, impose minimum charges or add unpaid interest to debt.

Trading fees apply to each opening or closing execution under the product’s fee basis. Perpetual funding is a separate signed payment based on the specified position value and rate at each settlement; you may pay or receive it. Borrowed principal, trade notional and funding value are different inputs. A loan rate does not apply to collateral merely because both amounts appear in the account.

Displayed price P&L may omit borrowing interest, funding or other costs. Reconcile net P&L using the actual product, account tier, holding time, borrowed asset and repayment rules. The futures fee and funding calculators below do not reproduce an unspecified spot-loan account.

Product examples and borrowing rules checked on 2026-09-29: Bybit · Kraken · Bitfinex

Suppose 1,000 USDT of your own funds plus a 2,000 USDT loan buys 3,000 USDT of BTC. At 30,000 USDT per BTC, you hold 0.1 BTC. A 10% price fall leaves a position worth 2,700 USDT against 2,000 USDT of debt: 700 USDT of equity before interest and fees. The 300 USDT loss is 30% of your original funds.

This is a constructed purchase funded by own capital and a loan. It is not universal wallet accounting or an exchange liquidation calculation. Isolated mode describes the collateral boundary; transfers, interest, other obligations and venue rules still matter. Spot borrowing interest is separate from perpetual funding.

Choose the quantity you need to estimate. These educational models require their stated inputs and do not replace an exchange’s account risk engine.

• Leverage and collateral
• Position size from a planned loss
• Simplified liquidation estimate
• Trading commission per execution
• Perpetual funding under stated assumptions