Analyst: High leverage is extremely dangerous in illiquid markets, and institutional liquidations amplify the chain reaction of declines.
Jinse Finance reported that Lucas Kiely, CEO of Future Digital Capital Management, stated that the recent crypto market crash serves as a "wake-up call" for traders, as high leverage is extremely dangerous in a low-liquidity environment. Coin Bureau analyst Nic Puckrin pointed out that even profitable positions were subject to automatic deleveraging (ADL) forced liquidation, indicating flaws in risk management mechanisms. The Block Research analysis noted that large-scale liquidation events may involve institutions and market makers, whose leveraged positions were forcibly closed, amplifying the price decline. When one round of forced liquidation triggers the next, the market experiences a self-reinforcing chain reaction of downward pressure.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Global economy risks fragmentation! Australia bets on AI as a new growth engine
In a potentially more fragmented and unpredictable global economy over the next 40 years, Australia relies on the deployment and development of artificial intelligence (AI) to drive economic growth.
Europe’s aviation fuel “red alert” in the fourth quarter: Shortfall will reach 510,000 barrels/day, South Korea’s exports surge to a four-year high to urgently fill the gap
According to analysts and shipping data, Europe will face a supply gap for aviation fuel in the fourth quarter, even as it turns to distant suppliers such as South Korea. South Korea's aviation fuel exports to Europe in September are set to reach a four-year high.
Apple (AAPL.US) nears a 5 trillion USD market capitalization, targeting Nvidia: the 1,999 USD foldable screen Duo becomes a critical battle.
Apple (AAPL.US) has unveiled its new iPhone, which could be the ticket for this consumer tech giant to reclaim its position as the most valuable company by market capitalization. The company is not far from reaching this goal.
Facebook and Instagram under Meta (META.US) experienced outages affecting thousands of users in the US last Sunday.
Thousands of users in the United States were unable to access Meta’s social platforms Facebook and Instagram last Sunday.
Crypto prices
More
