BLOCK & Crypto Leverage in India: Why Most Traders Get Wiped Out (2026)
Published 29 October 2026
Short answer: Leverage means trading with borrowed money, and it turns a small price move into a total loss. If you put in ₹10,000 and control ₹1,00,000, the market only has to fall about 10% before your ₹10,000 is gone. India's own regulator found that over 91% of individual traders in equity futures and options lost money in FY25. Crypto runs the same machine around the clock with no circuit breakers, and India's tax rules mean you pay 30% on your winners while your losers give you nothing back. The habit that protects beginners is simple: buy the coin, hold the coin, borrow nothing.
What does leverage actually mean?
Leverage is borrowing from the exchange so you can hold a bigger position than your own money would buy.
Say you have ₹10,000. At 10x leverage you control ₹1,00,000 of bitcoin. Your own ₹10,000 is the collateral, sometimes called margin. If bitcoin rises 10%, your position gains ₹10,000 and you have doubled your money. If bitcoin falls 10%, that same position loses ₹10,000, which is everything you put in.
At that point the exchange closes your position automatically, because there is nothing left backing it. You do not get a phone call and you do not get to wait for a bounce. CoinDesk put the same example plainly in October: someone using $1,000 to control a $10,000 position can lose their backing on a move of less than 10% against them.
Crypto exchanges commonly offer 10x, 20x, 50x and sometimes 100x. At 50x, a 2% move finishes you.
How many people actually lose money doing this?
India has unusually good data on this, because SEBI studied it.
In a study published in July 2025, covering the top 13 stock brokers and roughly 96 lakh unique traders, SEBI found that over 91% of individual traders in the equity derivatives segment made net losses in FY25. That is the same picture as the previous study, so it is not a one-year fluke.
The amounts are not small. Net losses by individual traders came to ₹1,05,603 crore in FY25, up 41% from ₹74,812 crore the year before, after counting transaction costs.
| SEBI study, individual F&O traders | FY24 | FY25 |
|---|---|---|
| Net losses after costs | ₹74,812 crore | ₹1,05,603 crore |
| Share of traders making net losses | Over 91% | Over 91% |
People also walked away. The number of unique individual traders in the segment fell from 61.4 lakh in the first quarter of FY25 to 42.7 lakh in the fourth.
Those are stock market futures and options, not crypto. But the mechanism is identical: borrowed money, a position bigger than your savings, and a forced exit when the market moves against you.
What happened on 10 October 2025?
The clearest picture of what leverage does at scale came on 10 October 2025.
After a US tariff announcement, crypto prices began sliding into a Friday evening when trading is thin. Positions that were underwater started getting closed automatically, those forced sales pushed prices lower, and that triggered the next set. Over 24 hours, more than $19 billion of leveraged positions were force-closed, the largest such day in crypto's history. About 1.6 million trading accounts were closed out.
Bitcoin fell from a Friday high of $122,574 to $104,782, down 14.5%. Most of the damage happened fast: roughly 70% of it in a 40-minute window, with $3.21 billion closed in a single minute.
This is the part beginners miss. You can be right about the direction over six months and still be finished in forty minutes, because leverage does not ask whether you were right eventually.
It is not a one-off either. On 15 October 2026, a fairly ordinary down day, $483 million of bitcoin and ether futures positions were closed in 24 hours, with ether accounting for $286 million of that and bitcoin $197 million.
Why is leverage worse in India specifically?
Because of how crypto is taxed. Under Section 115BBH, gains from transferring a virtual digital asset are taxed at a flat 30% plus applicable surcharge and cess, and the only deduction allowed is the cost of acquisition.
The part that hurts a leveraged trader is what happens to losses. A loss on a crypto transfer cannot be set off against any other income, including gains on another crypto trade, and it cannot be carried forward to a later year.
Think about what that does to someone taking many leveraged trades:
| Normal business or stock trading | Crypto in India | |
|---|---|---|
| Profit on trade A | Taxed | Taxed at 30% plus cess |
| Loss on trade B | Can reduce the taxable profit | Ignored entirely |
| Leftover loss | Can often be carried forward | Cannot be carried forward |
| Costs, fees, interest | Often deductible | Not deductible, only cost of acquisition |
So a year of ten winners and ten losers that nets to roughly zero can still leave you with a tax bill on the winners. There is also 1% TDS cut on transfers under Section 194S, which quietly reduces the capital you have available every time you trade.
High trade frequency plus borrowed money plus a tax regime that ignores your losses is a bad combination, and it is specific to India.
What should a beginner do instead?
The habit is one sentence: buy the coin, hold the coin, borrow nothing.
Practically, that means:
- Trade spot only. Spot means you own what you bought. The worst case is that it falls in value, not that it disappears while you sleep.
- Keep your emergency fund outside crypto first. Three to six months of essential expenses in a savings account or liquid fund, so a bad month never forces you to sell. We covered how much that is separately.
- Size positions so that a total loss is survivable. If the amount going in would change your month, it is too big.
- Use an FIU-registered exchange. Several offshore platforms were ordered blocked in India in September 2026. The list is here.
- Keep records from day one. The 30% tax and the Schedule VDA filing do not care how your year felt. We wrote a filing guide.
If you eventually want to use leverage, the honest precondition is a full year of spot records showing you made money without it. Almost nobody who skips that step gets a different result from the 91%.
Frequently asked questions
Is leverage trading legal in India? Trading crypto is legal in India, and gains are taxed at 30% plus cess. What is restricted is which platforms may serve Indian users: exchanges dealing with Indian customers must register with FIU-IND under the anti-money-laundering rules, and several offshore platforms were ordered blocked in September 2026. Legality is not the issue here. Survival is.
Does a stop-loss protect me when I use leverage? Partly, and less than you expect. A stop-loss is an instruction to sell at a price. In a fast cascade, with thin liquidity and exchange systems under load, the price you actually get can be well below the price you set. On 10 October 2025 several platforms had outages and API failures, so some traders could not manage positions at all.
What is a liquidation, in plain words? It is the exchange closing your trade for you because your collateral no longer covers the loss. You do not choose the moment and you do not choose the price.
If I only use 2x leverage, am I safe? Safer, not safe. At 2x it takes a 50% move to wipe you out rather than 10%, and bitcoin has had drawdowns larger than that. During the October 2025 cascade, even conservative positions were caught when the collateral itself lost value.
Can I at least write off my crypto losses against my salary? No. Section 115BBH blocks set-off of a virtual digital asset loss against any income, and blocks carrying it forward.
The takeaway
Over 91% of Indian futures and options traders lost money in a single year, to the tune of ₹1.05 lakh crore. Crypto offers the same borrowed-money mechanism with higher multiples, no trading halts and a tax regime that taxes your winners and ignores your losers. Bitcoin today sits about 37% below its October 2025 record, which is survivable if you own your coins and fatal if you rented them.
Buy the coin. Hold the coin. Borrow nothing.
Educational content only, not financial advice. Crypto and derivatives involve substantial risk of loss. Consult a qualified adviser about your own situation.
Sources
- Business Standard, "Net losses of individual traders in F&O widened in FY25: Sebi study", 7 July 2025
- CoinGecko, "What Is October 10th? Crypto's 10/10 Mass Market Liquidation Event", updated 6 February 2026, citing CoinGlass
- CoinDesk, "Nearly $1 billion in crypto bets liquidated as bitcoin, ether and XRP slide", 15 October 2026, citing CoinGlass
- Income-tax Act 1961, Sections 115BBH and 194S, as summarised in Indian crypto tax guides
- Kraken ticker and daily candles for bitcoin prices, checked 29 October 2026