What is a liquidation?
The forced closure of a leveraged position by an exchange or protocol when the collateral backing it is no longer sufficient.
When you trade with borrowed funds, the venue monitors your collateral. If the price moves against you past a threshold, your position is closed automatically to protect the lender — not to protect you.
Why it matters: liquidation means losing the collateral, and it happens at the venue’s discretion and speed, not yours. Because many traders cluster stops and leverage at similar levels, liquidations trigger further liquidations, producing the violent cascades crypto is known for. Leverage does not just amplify a loss — it can end the position entirely before any recovery.
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Crypto assets are volatile and high-risk. Prices shown are indicative and may be delayed. Always do your own research. Coinpric does not provide financial advice.