Liquidation (Crypto)
Definition
The forced closing of a leveraged position when collateral value falls below a required threshold.
Example
A sudden price drop can trigger liquidations in perpetual futures.
Related Terms
Frequently Asked Question
What is Liquidation in crypto?
Liquidation in crypto is the forced closing of a leveraged position when the collateral value falls below the required maintenance threshold. In DeFi protocols, this is automatic; in CEX perpetuals, it triggers a cascade that can move markets.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.