Crypto Liquidations Explained: What Traders Must Know

A crypto liquidation is the forced, automatic closure of your leveraged position when your margin balance drops to or below the exchange’s maintenance margin requirement.

If you are reading this because your position is close to that threshold right now, here is what to do immediately: Check your mark price, not the last trade price. The mark price is what triggers liquidation. View your displayed liquidation price on the exchange interface.

If the current mark price is within 5–10% of that number, act now. Add collateral to an isolated position to push the liquidation price further away. On cross-margin, adding funds to your account balance has the same effect.

Set or tighten a stop-loss above your liquidation price so you exit on your terms, not the exchange’s. Reduce position size if you cannot add collateral. Cutting size lowers your notional exposure and raises your effective margin ratio.