Definition ∞ Record liquidations refer to an unprecedented volume of forced closures of leveraged trading positions in financial markets. This event typically occurs during rapid and substantial price movements, where automated systems sell off assets held as collateral to cover margin calls that traders cannot meet. Such a large-scale cascade of selling can accelerate price declines, creating a feedback loop that exacerbates market volatility. Record liquidations highlight periods of extreme market stress and heightened risk for participants.
Context ∞ Cryptocurrency news frequently reports on record liquidations, particularly in derivatives markets, as a key indicator of market sentiment and volatility. These events often accompany sharp price drops in major digital assets, impacting numerous traders and contributing to market instability. The occurrence of record liquidations serves as a critical data point for analyzing market health and predicting potential short-term price movements.
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