A leverage reset describes a market event where excessive leveraged positions in trading are liquidated, leading to a rapid reduction in outstanding borrowed capital. This often occurs during periods of heightened volatility, as price movements trigger margin calls and forced selling. A leverage reset can stabilize markets by removing speculative excess.
Context
Leverage resets are a recurring phenomenon in highly speculative digital asset markets, particularly in futures and perpetual swap trading. News often reports on these events, noting their impact on market liquidity and short-term price direction. Observers monitor leverage ratios as an indicator of potential market instability and the likelihood of such a reset.
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.
