When you trade crypto with leverage, a tool that lets you control a larger position with less capital, you’re playing with fire. One sharp price drop—and your position gets liquidated, automatically closed by the exchange to prevent further losses. This isn’t a rare event. In 2024, over $20 billion in crypto positions were wiped out in a single week. Liquidations aren’t just a side effect of trading—they’re built into the system, and if you don’t understand them, you’re just giving money to the market makers.
Here’s how it works: you borrow funds to go long or short, and the exchange sets a liquidation price, the point where your collateral falls below what’s needed to cover your debt. If Bitcoin drops 10% and you’re trading 10x leverage, you’re already underwater. No warning. No second chance. The exchange closes you out, keeps your margin, and moves on. That’s why traders who use high leverage without stop-losses or proper risk management often end up broke. Even smart traders get caught. A sudden news spike, a whale dump, or a liquidity crunch can trigger mass liquidations in seconds. Platforms like dYdX, a decentralized exchange that still blocks users in certain countries, or regulated ones like LCX Exchange, a platform offering tokenized assets and regulated trading, all have the same liquidation rules. It’s not about trust—it’s about math.
What’s worse? Most people don’t even realize how close they are to being liquidated. They see a 5% gain and think they’re safe. But with 20x leverage, a 5% move against you means you’re at 100% loss. That’s why understanding margin trading, the practice of borrowing to amplify exposure isn’t about getting rich quick—it’s about surviving long enough to make real profits. The posts below break down real cases: how traders lost everything on leveraged bets, how exchanges set liquidation triggers, and how to spot warning signs before your position gets wiped. You’ll find deep dives into platforms like Sovryn and LCX, where risk controls vary, and learn how to set your own safety nets. No fluff. No hype. Just the hard truths about how crypto liquidations work—and how to make sure you’re not the next statistic.
Cascade liquidations in crypto markets are runaway sell-offs triggered by leveraged positions collapsing in a chain reaction. Learn how they work, why they're deadlier than in traditional markets, and how to protect your trades.
