Long Liquidations

Definition ∞ Long liquidations occur in cryptocurrency futures or margin trading when a trader’s “long” position falls below a certain margin threshold. This event automatically closes the position to prevent further losses for the exchange or lending platform. It is triggered by a significant price decline of the underlying asset. These forced sales can accelerate market downturns.
Context ∞ News reports often highlight large volumes of long liquidations during periods of market volatility, indicating strong downward price pressure. A critical discussion point involves the cascading effects these liquidations have on market stability and price discovery. Future market structures might incorporate mechanisms to reduce the severity of liquidation cascades.