Alert: High-risk crypto loans soar to 2022 highs, the market faces a liquidation crisis!

On October 18, according to CoinDesk, the latest data from the analysis company IntoTheBlock revealed that the crypto market is on the verge of instability! High-risk crypto loans (defined as loans with a liquidation price within 5%) surged to $55 million on Wednesday, the highest level since June 2022. The reasons behind this phenomenon are worth pondering.

Crypto traders usually lock digital assets as collateral through decentralized lending platforms to obtain loans. However, there is a huge risk here-once the value of the collateral falls by more than 5%, the loan will face liquidation risk. IntoTheBlock warned: "Large-scale liquidations will not only directly affect the value of the collateral, but may also cause more loans to be forced to liquidate, triggering a spiral decline in prices."

In the case of such a rapid market decline, insufficient collateral may cause loans to be unable to be repaid, resulting in deep non-performing and lender losses. The increase in bad debts will severely hit market liquidity, making it extremely difficult to conduct large transactions at stable prices.

As market volatility intensifies, traders need to be vigilant and ensure the safety of their assets. Always pay attention to market trends to deal with potential risks.

Follow Lao Lin to get more market insights to help you grasp the pulse and opportunities of crypto investment!

#BTC要挑战7W大关了吗？ #特朗普家族加密项目 #美国大选如何影响加密产业？ #特斯拉转移比特币 #美股财报季来袭 $BTC $ETH $BNB