Occasionally, headlines emerge about liquidations of $100 million or more in Bitcoin and cryptocurrency futures contracts, leading novice investors and non-expert analysts to point to excessive leverage as the culprit. Gamblers are undoubtedly largely responsible for these high-risk bets, especially when liquidations are concentrated on retail-oriented exchanges such as Bybit and Binance, but not every futures liquidation is the result of reckless use of leverage.

However, not all futures liquidations are caused by leverage.
Some trading strategies used by professionals can also be liquidated during sudden, dramatic price movements, but this does not necessarily represent a loss or a sign of excessive leverage. CME, OKX, and Deribit typically display much lower liquidation ratios than retail-oriented exchanges, indicating that these traders often employ more advanced strategies. Using the futures market, especially perpetual contracts (inverse swaps), is relatively simple. Almost every cryptocurrency exchange offers 20x or higher leverage and requires only an initial deposit, the so-called margin. However, unlike regular spot trading, futures contracts cannot be withdrawn from the exchange. These leveraged futures contracts are synthetic, but they also offer the possibility of shorting, i.e., betting on a price drop. These derivatives offer unique advantages and can improve a trader's results, but overconfident traders rarely make a profit in the medium to long term. To avoid falling into this psychological trap, professional traders often employ four different strategies to maximize profits, rather than relying solely on directional trading.