News is increasingly appearing about the liquidation of Bitcoin and cryptocurrency contracts worth $100 million or more, which raises questions among newcomers and analysts. However, not all liquidations are the result of reckless use of leverage. 📉

Some professional strategies may also be liquidated when prices fluctuate sharply, but this does not necessarily mean a loss or excess leverage.

Exchanges that cater to retail traders, such as Bybit and Binance, often have high liquidation rates, while CME, OKX, and Deribit tend to have lower liquidation rates.

Traders use a variety of strategies to maximize profits without relying solely on directional trades. This includes forced liquidations on low liquidity pairs, cash and carry trading, and funding rate arbitrage.

The use of derivatives requires knowledge, experience and a significant capital reserve to withstand market volatility.