(function(){
var COOKIE_NAME = 'menthorq_utm_params';
var LS_KEY = 'menthorq_utm_params';
var UTM_KEYS = ['utm_source','utm_medium','utm_campaign','utm_term','utm_content','utm_id'];
var CLICK_ID_KEYS = ['gclid','fbclid','msclkid','ttclid'];
var COOKIE_DAYS = 30;// Read UTM parameters and click IDs from current URL
var params = new URLSearchParams(window.location.search);
var trackingData = {};
var hasData = false;
var allKeys = UTM_KEYS.concat(CLICK_ID_KEYS);
for (var i = 0; i < allKeys.length; i++) {
var val = params.get(allKeys[i]);
if (val) {
trackingData[allKeys[i]] = val;
hasData = true;
}
}if (hasData) {
// Fresh tracking data found in URL — store it (overwrites previous attribution)
trackingData.captured_at = new Date().toISOString();
setCookie(COOKIE_NAME, JSON.stringify(trackingData), COOKIE_DAYS);
try { localStorage.setItem(LS_KEY, JSON.stringify(trackingData)); } catch(e) {}
return;
}// No tracking params in URL — check if cookie exists
if (getCookie(COOKIE_NAME)) return;// Cookie is missing (expired or first visit) — try to restore from localStorage
try {
var stored = localStorage.getItem(LS_KEY);
if (stored) {
var parsed = JSON.parse(stored);
if (parsed && (parsed.utm_source || parsed.gclid || parsed.fbclid || parsed.msclkid || parsed.ttclid)) {
setCookie(COOKIE_NAME, stored, COOKIE_DAYS);
}
}
} catch(e) {}// Helper: set cookie
function setCookie(name, value, days) {
var expires = new Date(Date.now() + days * 864e5).toUTCString();
var cookie = name + '=' + encodeURIComponent(value) + ';expires=' + expires + ';path=/;SameSite=Lax';
if (location.protocol === 'https:') cookie += ';Secure';
document.cookie = cookie;
}// Helper: get cookie value (returns empty string if not found)
function getCookie(name) {
var match = document.cookie.match(new RegExp('(?:^|; )' + name + '=([^;]*)'));
return match ? decodeURIComponent(match[1]) : '';
}
})();
var breeze_prefetch = {"local_url":"https://menthorq.com","ignore_remote_prefetch":"1","ignore_list":["/wp-json/openid-connect/userinfo","wp-admin","wp-login.php"]};
//# sourceURL=breeze-prefetch-js-extra
What It Is, How It Works, and Why It Matters for Traders
What Is a Liquidation in Crypto?
Liquidation refers to the forced closing of a trader’s position by an exchange or broker when the trader’s account value falls below a certain required margin threshold.
This is most common in leveraged trading, where you borrow funds to increase your position size. If the market moves against you, and your losses approach the collateral you’ve posted, the exchange will automatically sell or reduce your position to prevent further losses.
In essence, it’s the exchange saying:
“You’ve lost too much, we’re closing your trade to limit risk.”
When Does Liquidation Happen?
Most crypto derivatives platforms (like Binance Futures, Bybit, Deribit, and others) require initial margin to open a position and maintenance margin to keep it open. If your account equity falls below the maintenance margin, liquidation is triggered.
This varies slightly by platform, but the concept is the same. For long positions, liquidation occurs if the price falls, and for shorts, it happens if the price rises.
Example:
You open a 10x long position on BTC with $1,000 collateral.
You’re controlling $10,000 worth of BTC.
If BTC drops ~10%, your position is worth ~$9,000.
Since your entire $1,000 margin is gone, the exchange will liquidate your position.
Types of Liquidations
Full Liquidation
The entire position is closed. This happens when there’s no auto-deleveraging (ADL) system or insurance fund support available to soften the blow.
Partial Liquidation
Exchanges like Binance and Bybit may attempt to reduce your position size before fully closing it. This allows you to remain in the trade, but with less exposure.
Auto-Deleveraging (ADL)
When markets are highly volatile and the insurance fund can’t cover the loss, your position may be closed and transferred to another trader on the other side of the book (who will absorb the PnL). This is rare but happens in extreme stress.
Why Liquidations Matter for the Crypto Market
Crypto markets are heavily influenced by leveraged positions, especially in Bitcoin (BTC) and Ethereum (ETH) perpetual futures. These positions create a feedback loop:
Cascading Liquidations
If prices fall rapidly, traders start hitting liquidation levels. Their positions get sold, which pushes prices down even more, triggering further liquidations.
This is why we sometimes see sudden price crashes or rallies, they’re amplified by automated liquidation engines.
High Open Interest Increases Risk
If a large number of leveraged positions are open, especially on one side of the market, the system becomes fragile. A small move can trigger a massive chain of liquidations.
This is why traders monitor Open Interest, funding rates, and liquidation heatmaps closely, they help assess whether the market is crowded or due for a “flush.”
Where You Can Track Liquidations
Modern crypto traders often use specialized tools to monitor liquidation dynamics and leverage buildup. MenthorQ’s dashboard, for instance, offers the ability to track:
Net GEX (Gamma Exposure) on BTC options to understand dealer flows
Volatility Smile and Skew to assess hedging pressure
Implied vs Realized Volatility to anticipate reflexive pricing
Funding Rate trends to identify crowded long/shorts
Term Structure curves to detect stress points across expiries
On June 18, 2022, Bitcoin dropped from ~$22,000 to under $18,000 in a few hours.
Over $600 million in long positions were liquidated across exchanges.
The majority of these were 10x-20x leveraged longs.
The move was amplified as liquidations triggered stop losses, margin calls, and further automated selling.
This is what traders call a “long squeeze” the forced exit of overleveraged longs.
Understanding Crypto Liquidation 5
Tips to Avoid Liquidation
If you’re trading with leverage in crypto, risk management is not optional. Here are some ways to protect your account:
Use Lower Leverage. High leverage may look attractive, but it drastically reduces the margin for error. Using 2x–5x leverage gives you more breathing room than 20x or 50x.
Set Stop Losses. Manual stop losses help you exit a trade before the exchange liquidates you. You stay in control, and the exit is on your terms.
Monitor Margin Ratio. Your exchange will show you your current margin usage and liquidation price. Monitor it closely, especially during high volatility periods.
Isolate vs Cross Margin. Use isolated margin when possible to limit your risk to a single trade. With cross margin, your entire wallet balance can be used to maintain a position — which increases the risk of a wipeout.
Watch the Market Structure. Track where other traders are likely to get liquidated. Liquidity often clusters around liquidation levels. If you can front-run or fade the herd, you avoid being one of the many forced to sell.
Liquidation is not unique to crypto, it exists in all leveraged financial products. But crypto’s always-on, highly leveraged, retail-driven structure makes it particularly susceptible to liquidation cascades and volatility shocks.
Understanding how liquidation works helps traders:
Avoid common mistakes
Build more resilient positions
Recognize high-risk setups in the broader market
If you’re going to use leverage, use it intelligently, with tools, stop-losses, and a healthy respect for volatility.
Want to get ahead of liquidation waves? Use platforms like MenthorQ to track volatility structures, options flows, and sentiment in real-time, so you’re never the last one out when the music stops.
