ETH fell 19.77% with a 14.66% day while margin rules were sized to calmer weeks
Should the risk team raise initial margin on leveraged ETH positions now, or keep current requirements and rely on the liquidation engine to absorb a repeat of Monday?
The market facts are real; the decision maker is illustrative.
The week and the position
In the week of 3 March 2025, ETH fell 19.77%, from 2518.12 to 2020.41, with a 14.66% loss on Monday and a -4.29% hour that same mid-day, closing in the lower third of a 26.83% range at 50.56% below its 52-week high. Realised volatility was 101.3% annualised, and the week ranked in the 5th percentile of 368 weeks of history. An exchange risk team sets initial and maintenance margin for leveraged clients; funding was near zero, averaging 0.0021% per eight hours.
Judgment
A margin requirement protects the exchange only if positions can be closed before losses outrun collateral. A 14.66% day with a -4.29% hour can carry an account through the maintenance trigger into negative equity, so raise initial margin for ETH and set it from the worst daily and hourly moves rather than the weekly average. Keep maintenance margin unchanged and apply the higher requirement to new and increased positions, not to existing ones. The near-zero funding gives no reason to favour keeping leverage cheap.
What would change it
If the exchange's own liquidation records for this week show fills close to the trigger price rather than below it, the case for a higher initial margin weakens. If ETH's realised volatility and daily moves fall back towards its prior 12-week range for several weeks, the requirement can be reviewed.
What sets this case apart
The decision rests on a single worst day and hour inside a historically extreme week, and on ETH underperforming BTC by 5.41 percentage points, not on the weekly return alone.