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👉👉Understanding the $144M Liquidation👈👈
​Liquidation occurs when a trader’s margin account can no longer support their open position because the market moved against them. The exchange is forced to close the position (sell the asset) to prevent further losses.
​Long vs. Short: In this recent move, the majority of liquidations were long positions (traders betting on price increases). This suggests a sudden, unexpected downward volatility caught bulls off guard.
​Asset Breakdown: While Bitcoin (BTC) and Ethereum (ETH) usually account for the lion's share, liquidations of this magnitude often see a high percentage of "altcoins" (like SOL or XRP) being sold off, as they are typically more volatile.
​The Cascade Effect: When a large volume of longs are liquidated, it pushes the price lower, which triggers the next set of liquidation prices, creating a "domino effect" that can crash prices by 5–10% in minutes.
​Immediate Market Impact
​Price Flash Crash: Major assets like Bitcoin often see a temporary "wick" down to lower prices before buyers step in to capitalize on the dip.
​Increased Volatility: Such events wash out "weak hands" and over-leveraged speculators, leading to a period of high volatility as the market seeks a new support level.
​Funding Rates: Funding rates for perpetual futures often reset or turn negative after such an event, indicating that the market has cooled off from its previously "overheated" bullish sentiment.
​Why Did This Happen?
​Liquidations of this size are typically triggered by:
​Geopolitical Events: Sudden macro news, such as trade tariffs or regulatory crackdowns.
​Whale Activity: Large market sell orders that push the price just enough to hit clusters of liquidation levels (often called "hunting for liquidity").
​Profit Taking: After a long rally, institutional or retail profit-taking can start a sell-off that leverages traders can't withstand.
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