Definition ∞ Leverage cleared refers to the event where a substantial volume of leveraged trading positions in a financial market is forcibly closed. This occurs when market prices move adversely against these positions, causing them to hit their liquidation thresholds. It represents a significant reduction in open speculative interest.
Context ∞ This phenomenon, often termed a “long squeeze” or “short squeeze,” can lead to rapid price changes and heightened volatility as liquidation cascades through the market. Crypto news frequently reports on such events, particularly during periods of high market stress or unexpected price movements. It is a key indicator of market instability and deleveraging.
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