The leverage myth on Bitunix ETH perps

Leverage decides how much of your own money is locked up to hold that size, and how close liquidation sits.

Here is the same ETH trade shown before and after changing leverage, using the Bitunix ETHUSDT perp at 4:13 PM ET today. The screenshot shows that page: last around 2,314.80, mark 2,315.45, index 2,316.20, 24h high 2,378.67 and low 2,292.22, funding 0.0085% with about 3 hours 46 minutes to the next settlement, and the VIP 0 fee line reading Maker 0.0200% and Taker 0.0600%.

The basics first

A long profits when price goes up. PnL = (exit price - entry price) x size. A short profits when price goes down. PnL = (entry price - exit price) x size. Size is in ETH. On a USDT-margined perp, PnL lands in USDT.

Before: 0.5 ETH at 5x

Entry near the mark price of 2,315.67 makes 0.5 ETH worth about 1,157.84 USDT. At 5x, Bitunix's own formula (contract value = margin x leverage) means margin is about 231.57 USDT. A 1% rise is 23.16 per ETH. On 0.5 ETH the profit is about 11.58 USDT. Return on margin: 11.58 / 231.57 = 5.0%.

After: the same 0.5 ETH at 20x

Position value is unchanged at about 1,157.84 USDT. Margin drops to about 57.89 USDT. The same 1% rise still makes about 11.58 USDT. Not a cent more. Return on margin: 11.58 / 57.89 = 20.0%.

The percentage looks four times bigger, which is where the myth comes from. But the USDT in your account is identical. What changed is the downside. At 5x, margin is 20% of position value, so a fall of a bit under 20% wipes it. At 20x, margin is 5% of position value, so a fall of a bit under 5% does it, and liquidation comes sooner than that because maintenance margin has to stay in the account.

Today's ETH range makes this real. From the 24h high of 2,378.67 to the low of 2,292.22 is 86.45 per ETH, about 3.6% off the high. A 0.5 ETH short across that whole move would have made about 43.23 USDT at any leverage. A 20x long opened at the high would have been about 1.4 percentage points away from losing its whole margin, and liquidation would come before that.

The costs that do not care about leverage

Taker fee at 0.06% on 1,157.84 USDT is about 0.69 USDT to open and roughly the same to close, about 1.39 USDT round trip. Funding at 0.0085% on 1,157.84 USDT is about 0.10 USDT per 8-hour settlement, paid by longs to shorts while it is positive. Both are charged on position value, so 20x does not shrink them.

Common mistakes

• Picking leverage first and size second. Pick size from how much USDT you can lose, then use leverage only to decide margin.
• Comparing ROE percentages between trades with different leverage. Compare USDT.
• Forgetting that a short's losses grow as price rises with no ceiling except liquidation.
• Ignoring fees on high-leverage scalps. 1.39 USDT round trip on 0.5 ETH is more than a tenth of the 1% move profit.
• Thinking this is an ETH quirk. The same math applies to BTC, SOL, XRP and DOGE perps.

Short FAQ

Does Bitunix let me use 200x on ETH? The API lists 200x as the max for ETHUSDT. Max does not mean sensible.

What is the smallest ETH order? The contract data lists 0.003 ETH.

Does isolated margin cap my loss? Bitunix's help page says an isolated liquidation only loses the margin on that position, not the rest of the account.

Takeaway: leverage changes how much margin you lock and how close liquidation is, never how many USDT a move pays you.