Crypto liquidation occurs when a leveraged trading position in cryptocurrency is forcibly closed by an exchange or lending protocol. This happens when the value of the collateral falls below a predetermined maintenance margin level. It is an automated process designed to prevent further losses for the lender or exchange. Liquidations can cause rapid price movements in volatile markets.
Context
News reports frequently highlight large-scale crypto liquidations during periods of high market volatility, particularly when prices experience sharp declines. These events can trigger cascading sales, exacerbating downward price pressure across the market. Understanding liquidation thresholds and their impact is critical for participants in decentralized finance (DeFi) lending and derivatives markets. The frequency and volume of liquidations serve as a key indicator of market stress.
We use cookies to personalize content and marketing, and to analyze our traffic. This helps us maintain the quality of our free resources. manage your preferences below.
Detailed Cookie Preferences
This helps support our free resources through personalized marketing efforts and promotions.
Analytics cookies help us understand how visitors interact with our website, improving user experience and website performance.
Personalization cookies enable us to customize the content and features of our site based on your interactions, offering a more tailored experience.
