A liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to the trader’s inability to meet the margin requirements. Large-scale liquidations can indicate market extremes, like panic selling or buying.
A cascade of liquidations might suggest a market turning point, where a price reversal could be imminent due to an overreaction in market sentiment.
This article was originally published by Coindesk.com. Read the original article here.
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