Leverage in crypto trading refers to using borrowed funds to make trades, in order to profit bigger. In other words, leverage is here for traders to amplify their buying or selling power. So when traders’ initial capital is small, they can use it as collateral to make leveraged trades.
Leveraged trading of cryptocurrencies — i.e., trading crypto with borrowed funds — comes with significant risks. This is mainly due to the capricious nature of the market. Some major jurisdictions have taken it upon themselves to protect crypto investors from leverage risks by imposing stringent regulatory requirements.
https://cointelegraph.com/news/crypto-market-turmoil-highlights-risks-of-leverage-in-trading