What is Liquidation?

Forced closing of leveraged positions.

📖 Full Definition

Liquidation occurs when a leveraged trading position is automatically closed by the exchange because the trader's collateral falls below the maintenance requirement. Liquidations can result in total loss of margin.

💡 Example

During Bitcoin's 2021 flash crash, over $10 billion in leveraged positions were liquidated in 24 hours.

🔗 Related Terms

🔮 Ready to Apply This Knowledge?

See AI-powered predictions for top cryptocurrencies, updated daily.