Futures Liquidations

Definition ∞ Futures Liquidations involve the forced closure of a leveraged futures position in cryptocurrency markets when a trader’s margin collateral falls below the required maintenance level. This event is triggered by adverse market movements against the trader’s open position, resulting in the automatic sale of assets to cover losses. It is a risk control mechanism in derivatives trading.
Context ∞ High volumes of futures liquidations can intensify price volatility in digital asset markets, especially during periods of rapid price changes. These events are closely tracked by market analysts as indicators of market stress, excessive leverage, and potential short-term price reversals. News reports often highlight liquidation cascades as a factor contributing to significant market shifts.