Definition ∞ Retail liquidations refer to the forced closure of leveraged trading positions held by individual, non-institutional investors in financial markets, including cryptocurrency derivatives. These liquidations occur when an investor’s margin balance falls below a required threshold, prompting exchanges to automatically close positions to prevent further losses. This often happens rapidly during periods of high market volatility. Such events can amplify price movements.
Context ∞ Reports of significant retail liquidations often coincide with sharp price movements in cryptocurrency markets, serving as an indicator of extreme market sentiment. These events can trigger cascading effects, contributing to further price declines or recoveries. Analysts frequently monitor liquidation data to gauge the extent of market overextension and potential areas of support or resistance.
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