Liquidation in Crypto: What It Means and How to Avoid It

When you trade crypto with liquidation, the forced closing of a leveraged position when losses exceed your collateral. Also known as margin call, it’s when the exchange automatically sells your position to cover losses—no warning, no second chance. This isn’t just a technical term; it’s the moment many traders lose everything they put in. If you’re using leverage on platforms like BloFin or Bybit, you’re already playing with fire—and liquidation is the match.

Liquidation doesn’t happen randomly. It’s tied directly to your leverage, the amount of borrowed capital you use to amplify your trade size. For example, 100x leverage means you control $10,000 with just $100. One small move against you, and your entire stake vanishes. The liquidation price, the exact market price at which your position gets closed, is calculated in real time by the exchange. Most traders don’t check it until it’s too late. On exchanges like Bitstamp or AstroSwap, where users trade with real funds, liquidation can wipe out weeks of gains in seconds. But here’s the truth: it’s not the market that kills you—it’s your own position size.

People think liquidation only happens to beginners. That’s wrong. Even experienced traders on high-leverage platforms like BloFin get caught because they ignore risk management. They see a 5% move as "safe" and double down. But in crypto, 5% can be a death sentence when you’re at 50x or 100x. The best traders don’t chase big wins—they avoid getting wiped out. They set stop-losses, use lower leverage, and never risk more than 1-2% of their balance on a single trade.

Look at what’s happening in the crypto world right now. In 2025, with markets more volatile than ever, liquidations spiked during Bitcoin price swings. The U.S. and UAE have seen the most liquidations—not because they trade more, but because traders there use the highest leverage. Meanwhile, places like Malta and Russia have stricter rules, and fewer traders use extreme leverage. The lesson? It’s not about how much you make. It’s about how long you stay in the game.

You’ll find posts here that break down real cases: how one trader lost $20,000 on a single liquidation, how DeFiHorse’s token price crashed and triggered hundreds of liquidations, and why platforms like Mimo.exchange are risky because of poor liquidation safeguards. You’ll also see guides on how to calculate your own liquidation price, how to use insurance funds, and which exchanges have the safest liquidation systems. This isn’t theory. It’s what’s happening right now—on every major platform, every hour, every day.