Crypto Futures Liquidations: Unpacking the Sudden $117 Million Plunge

Key Points

1. Over $117 million in crypto futures were liquidated in one hour, contributing to a total of $885 million in 24 hours.

2. Crypto futures liquidations occur when a trader's margin falls below the required level, forcing the exchange to close the position.

3. High leverage in trading can amplify losses, making liquidations more likely during sudden market movements.

4. Historical events like the May 2021 crash, Terra/Luna collapse, and FTX implosion have led to even larger liquidation cascades.

5. Traders can mitigate risks by using stop-loss orders, managing leverage, and staying informed about market conditions.