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What is crypto liquidation?
However, in the crypto space, the term liquidation is mainly used to describe the forced closing of a trader’s position due to the partial or total loss of the trader’s initial margin. This happens when they cannot meet the margin requirements for their leveraged position — i.e., they have insufficient funds to keep the trade open.What is liquidation in futures trading?
The term liquidation is traditionally used to describe the conversion of assets into cash. But in futures trading, liquidation is something you want to avoid by all means. Leveraged positions are prone to volatile price swings, which may cause a trader’s equity to plunge into negative balance instantaneously.Why is liquidity important in crypto?
Assets with high liquidity offer greater flexibility and accessibility to investors. They can swiftly convert their holdings into cash or other assets, providing the freedom to respond to changing investment opportunities or unforeseen financial needs. What Is Liquidity in Crypto?Why is cryptocurrency considered a liquid asset?
Cryptocurrencies with a high market capitalization are considered highly liquid assets due to the substantial trading volumes and broad market participation they attract, allowing for easier buying and selling without significantly impacting their prices. What Is Liquidity Risk?