What Are Crypto Liquidations? A Must-Know Mechanism for Newcomers in the Crypto Market

What is Crypto Liquidations?

Crypto Liquidations in Chinese is usually translated as “加密清算” or “Get Liquidated”, referring to the act of cryptocurrency trading platforms forcibly closing a user’s position when their margin is insufficient.

It is an automated risk control measure in the leveraged trading mechanism. Simply put: when you trade cryptocurrencies with borrowed money, if the market fluctuates sharply in the opposite direction and your account assets can no longer hold, the platform will forcibly sell (or buy) the assets you hold to prevent further losses for both the platform and yourself.

Why does Get Liquidated happen?

The triggers for crypto liquidations usually have the following reasons:

1. Using high leverage: it amplifies profits but also amplifies risks. Leverage above 5 times is easily liquidated during extreme fluctuations.
2. Market reversal: For example, if you originally went long on BTC, but suddenly Bitcoin plummets, you will get liquidated.
3. No Stop Loss Set: Many newbies forget to set their stop-loss levels, and once the market reverses, they find themselves passively getting liquidated.
4. Poor asset liquidity: Some small cryptocurrencies have insufficient liquidation depth, leading to greater losses once triggered.

Latest Get Liquidated Case: All Network Liquidation Data for July 2025

According to the joint data from CoinGlass and ChainCatcher, as of July 2, 2025 (UTC time), there have been approximately $250 million in forced liquidation events in the global crypto market over the past 24 hours, affecting more than 93,000 investors. The details are as follows:

Liquidation Direction:

• Long position liquidation: approximately 99.1 million USD
• Short position liquidation: approximately 150 million USD

Main Force Get Liquidated Assets:

• Total Liquidation of BTC: 57.66 million USD (combined long and short)
• ETH Total Liquidation: 67.56 million USD (combined long and short)

The largest liquidation platform and single settlement: Binance BTC/USDT contract, with a liquidation amount reaching up to 12.2 million USD.

The background of this liquidation wave is that Bitcoin quickly fell from around $107,000 to the $105,000 level, leading to a large number of high-leverage long positions being wiped out; at the same time, ETH also experienced a pullback, triggering a chain liquidation.

How can newbies avoid the risk of getting liquidated?

If you are a Newbie entering the crypto market, the following points of advice are especially important:

1. Start with spot trading and don’t rush to use leverage: Leverage may be tempting, but the volatility is huge, and newbies can easily Get Liquidated.
2. Even when using leverage, do not exceed 3 times; this can extend the risk tolerance space to some extent and avoid triggering liquidation easily.
3. Set a stop-loss line and trade with discipline: for example, if the entry price drops by 5%, then stop-loss and exit, even if it results in a loss, you can still preserve your principal.
4. Choose mainstream cryptocurrencies + depth good platform BTC, ETH have good liquidity and deep depth, not easy to experience extreme slippage.
5. Pay attention to the liquidation map and the Get Liquidated heat map: real-time liquidation charts provided by CoinGlass can help you determine which price ranges are “Get Liquidated hotspots” and avoid them in advance.

Summary

Crypto Liquidations is one of the risks in the encryption world that cannot be ignored. By understanding its basic principles and combining the latest market data (such as the liquidation wave in July 2025), you can grasp the logic behind liquidations more clearly. Newbies should pay attention to position management and risk control at all times to avoid being passively liquidated during market fluctuations.

Mastering the liquidation mechanism is not only the foundation of entering the crypto market but also the first lesson for every investor to save their life.