How does liquidation work in crypto? Margin, price, cascades
Liquidation closes a leveraged trade when margin runs out. How to work out your liquidation price, what maintenance margin is, and how cascades start.
Liquidation is when an exchange closes your leveraged trade because your margin can no longer cover the loss. A rough rule puts your liquidation price about 1 divided by your leverage away from your entry, so about 10% at 10 times and 5% at 20 times, and maintenance margin moves it a little closer. How often price reaches that line changes a lot with the market: on Binance Bitcoin perps, a 5% drop within 24 hours followed 22.47% of hourly closes in 2021 but only 3.49% in 2023.
So the odds depend on how thin your cushion is, and on the year. These are past cases, not a forecast.
For the full odds at each leverage level, from 1 hour to 7 days, see How often would 10x or 20x leverage get liquidated?.
What is liquidation in crypto?
A perp is a futures contract that never expires. (Our guide to what a perpetual future is covers the basics.) To open a trade you post margin, which is your own money set aside as a guarantee.
Leverage lets you open a position bigger than your margin. For example, $10 of margin at 10 times leverage opens a $100 position. A long gains when price rises. A short gains when price falls.
If the price moves against you by about a tenth, a $10 loss uses up your $10 of margin. The exchange will not let your loss grow past what you put in, so it closes the trade for you. That is a liquidation.
In real life it happens a little sooner. Exchanges require a minimum cushion called maintenance margin. The price where your losses eat down to that cushion is your liquidation price.
How far does price have to move to liquidate you?
A rough rule: at a leverage of L times, a move of about 1 divided by L against you reaches the liquidation area. So a long's rough liquidation price is the entry price times (1 − 1/L), and a short's is the entry price times (1 + 1/L). At 10 times, that is about 10% away. At 20 times, about 5%. At 100 times, about 1%.
This is an approximation. Real liquidation prices depend on maintenance margin, fees and the exchange's own formula, and they sit a bit closer than this rule says.
We measured how often Binance Bitcoin reached each distance. For every hourly close, we checked the next 24 hourly bars, and the next 7 days. Did the lowest price reach this far below the close (bad for a long)? Did the highest price reach this far above it (bad for a short)? A brief touch counts.
| Leverage | Rough distance | Long: touched within 24 hours | Short: touched within 24 hours | Long: touched within 7 days |
|---|---|---|---|---|
| 5 times | 20% | 0.18% | 0.15% | 3.86% |
| 10 times | 10% | 1.94% | 1.77% | 16.21% |
| 20 times | 5% | 9.91% | 10.19% | 42.94% |
| 25 times | 4% | 15.07% | 15.46% | 51.96% |
| 50 times | 2% | 39.29% | 39.05% | 74.44% |
| 100 times | 1% | 63.54% | 64.15% | 86.42% |
The 24-hour columns cover 62,333 hourly closes on Binance BTCUSDT, and the 7-day column 62,189. Every row is a past share, not a chance you can count on.
Going from 10 times to 20 times made the 24-hour touch rate about five times higher. Holding longer matters just as much. A 10% drop came within 7 days after 16.21% of hourly closes, more than eight times the 24-hour share.
Do other coins hit these levels more often?
Yes. These coins moved more than Bitcoin, so the same distance was reached more often. Here are 24-hour shares.
| Binance perp | 5% below | 10% below | 10% above |
|---|---|---|---|
| BTCUSDT | 9.91% | 1.94% | 1.77% |
| BNBUSDT | 14.77% | 3.88% | 3.04% |
| ETHUSDT | 17.35% | 3.97% | 3.40% |
| DOGEUSDT | 25.51% | 7.01% | 8.40% |
| SOLUSDT | 29.60% | 7.92% | 9.89% |
For SOL, a 10% move up was more common than a 10% move down. For BTC, it went the other way. Neither side is safer in general. A jump up can liquidate shorts, just as a drop can liquidate longs.
Did the odds change over time?
A lot. Here is Binance Bitcoin over 24 hours, for 5% and 10% moves against a long.
| Year | Hourly closes | 5% below within 24 hours | 10% below within 24 hours |
|---|---|---|---|
| 2021 | 8,760 | 22.47% | 5.74% |
| 2023 | 8,760 | 3.49% | 0.30% |
| 2025 | 8,760 | 5.75% | 0.60% |
| 2026 (to Oct 19) | 6,985 | 4.17% | 0.52% |
In 2021, a 5% drop within a day was common. In 2023, it was rare. A past year's numbers do not tell you which kind of year you are in now. Our guide to measuring crypto volatility shows how to check how wild the market is.
What is a liquidation cascade?
A cascade is many liquidations in a short time. Price falls. Some longs run out of margin and are closed by force, which means the exchange sells. That selling can push the price down further, so more longs run out of margin. Shorts can do the same in reverse, since closing a short means buying.
On Hyperliquid, we flagged a five-minute bar as a cascade bar when forced closures on one side were at least $5,000 and above the 95th percentile of the previous 24 hours. We then merged bars that started less than an hour apart into one episode, and kept the 300 largest episodes from June 2025 to September 2026. The smallest of them had $878,798 liquidated in its biggest bar.
In 210 of the 300 episodes, the biggest bar was forced closing of longs. In 90, it was shorts. In 196, both sides were forced out at some point.
What did price do next? The median is the middle value after sorting.
| Biggest bar | Episodes | Median move, 1 hour later | Share higher, 1 hour later | Share higher, 1 day later |
|---|---|---|---|---|
| Forced longs closed | 210 | +0.81% | 66.19% | 52.38% |
| Forced shorts closed | 90 | −0.59% | 40.00% | 37.78% |
After forced long closing, price was more often higher an hour later, but a day later the share was close to half. The spread was wide. For all 300 episodes, a day later the 10th percentile was −12.65% and the 90th was +11.44%. The largest episode, on Aug 26, 2025, was XPL with about $136 million of shorts closed in one bar. XPL was down −55.23% one hour later. Our article on what happened after liquidation cascades has the full table and the cases that went the other way.
What does this data not show?
- It does not say where any exchange puts your liquidation price. 1 divided by the leverage is a rough distance only.
- Starting hours overlap, because every hour is a start. The true number of independent cases is far smaller than 62,333.
- The cascade episodes were picked after the fact for being large. They are past events, not a rule you could have followed.
- Fees, funding and mark prices (the price exchanges often use to trigger liquidation) are not modelled.
How we measured this
For the touch odds, we used Binance perp hourly bars for Bitcoin from September 2019 to October 2026 and the other coins from their own start dates. For each hourly close, we checked whether a later hourly low reached the line below, or a later high reached the line above. We cannot see which came first inside an hour. Windows with a missing bar were dropped.
For cascades, we used Hyperliquid's five-minute liquidation records from June 2025. We required real trades in the minutes we measured and filled no missing prices. We measured price from the close of each episode's biggest bar. The sample favours busy coins, and moves are before fees.
Try this in Comparand
Connect Comparand to your AI app, then ask about Hyperliquid:
- "Show the cascade events on October 10, 2025, with what happened after each one." The daily tool (hl_cascade_events) returns that archive day's cascade events. Ask for the "after" option to get what the price did next. It costs $0.005 per call on pay as you go.
- "Show the 10 largest liquidation minutes on Hyperliquid in October 2025, and only the buy side." The ranking tool (hl_liquidations_top) returns the largest single minutes in a span of up to 548 days. You can pick all coins or a list, and the buy or sell side. It costs $0.01 per call on pay as you go.
Both return single events, not averages. Merging them into episodes and working out medians is up to you or your agent. Plans include unlimited data tools under fair-use limits.
You can try 3 coins free, read the docs, or see pricing.
The short version
- Liquidation closes a leveraged trade when the margin runs out, a little before the margin is fully gone.
- On Binance Bitcoin, price touched 2%, 5% and 10% below an hourly close within 24 hours in 39.29%, 9.91% and 1.94% of cases.
- The same distance was reached more often for other coins and in wilder years like 2021.
- A cascade is many liquidations at once. After the 300 largest Hyperliquid episodes, results went both ways.
- These are past cases, not a forecast, and not a way to pick a safe leverage.
Questions people ask
What does liquidation mean in crypto?
Liquidation is when an exchange closes your leveraged trade because your margin can no longer cover the loss. It happens automatically, without asking you.
How likely is a 10% move against a Bitcoin position in a day?
On Binance Bitcoin perps from September 2019 to October 2026, price fell to 10% below an hourly close within the next 24 hours in 1.94% of cases, and rose to 10% above in 1.77%. A 5% move happened in 9.91% (down) and 10.19% (up) of cases. These are past cases, not a forecast.
What is maintenance margin?
Maintenance margin is the smallest cushion an exchange requires you to keep in a trade. When your losses eat the margin down to that level, the exchange liquidates the trade. Because of this, real liquidation happens before you lose all your margin.
What is a liquidation cascade?
A cascade is many liquidations in a short time. Forced closing of trades can push the price further, which can trigger more liquidations. After the 300 largest Hyperliquid episodes from June 2025 to September 2026, price one day later ranged from −12.65% (10th percentile) to +11.44% (90th percentile).
Do you lose everything when you are liquidated?
Usually you lose the margin you put into that trade. Details differ by exchange and account type, so read your exchange's rules before you trade.