Should you buy 1,000 won a day? ‘Recurring buys’ draw attention in a crypto downturn

Beware forced liquidation in lending

As price volatility in cryptocurrencies such as Bitcoin has recently increased, interest is also growing in investment services that diversify entry timing and assets beyond direct trading. However, some warn that caution is needed, as service conditions differ by exchange and there can be a risk of forced liquidation depending on the case.

According to the crypto industry on the 21st, three exchanges—Upbit, Coinone and Korbit—offer recurring buy (coin accumulation) services. Under this service, users automatically buy a fixed amount every day (or at a set interval). The range of supported assets varies by exchange. Coinone supports recurring purchases for 10 cryptocurrencies including Bitcoin. Upbit and Korbit allow recurring buys for only four assets—Bitcoin, Ethereum, Ripple and Solana. Given the nature of automated buying, purchases may continue even if the market plunges, and since the underlying assets themselves are highly volatile, investors should note that the possibility of principal losses remains high.

Coin lending services are mainly used as a way to profit when cryptocurrency prices fall. This is because users can sell immediately after borrowing cryptocurrency, then buy it back in the market and repay it later when the price has dropped, locking in the spread. The structure is identical to profiting from short selling in the stock market.

However, coin lending services require caution because if the “lending ratio”—the ratio of the value of borrowed assets to the value of collateral—rises, both collateral and borrowed assets may be forcibly liquidated. Forced-liquidation thresholds differ by exchange. Upbit initiates forced liquidation when the lending ratio reaches 92%. Bithumb, Coinone and Korbit forcibly liquidate when the lending ratio is 95% or higher.

An industry official advised, “When markets move abruptly, liquidations can proceed quickly,” adding that “users should carefully check collateral maintenance requirements, fees and interest costs, and liquidation thresholds.”

Reporter Jeong Ui-jin