Overleveraged refers to a situation where an investor uses an excessive amount of borrowed funds to trade or invest in assets, leading to a high level of debt relative to their own capital. In the context of crypto trading, this often occurs when individuals or institutions take on large positions to amplify potential gains.While leveraging can increase profits, it also magnifies risks. If the market moves against an overleveraged position, losses can quickly escalate. Traders may face margin calls, requiring them to either deposit more funds to maintain their positions or sell off assets to cover the debt. This can lead to significant financial losses and, in extreme cases, account liquidation.Many platforms allow high leverage ratios, tempting traders to take risks they might not otherwise consider. As a result, overleveraged positions can contribute to increased volatility in the market, especially during rapid price fluctuations. Understanding the implications of leverage is vital for anyone involved in trading or investing.