🔥$1.18bln liquidated on March 5th | #Education

🤔 Why is #liquidation important?

📌Liquidation is the forced closing of a trade in which borrowed funds were used. It occurs at market price when the amount of unrealized losses approaches the amount of collateral.

🔊Margin call is an exchange alert about approaching liquidation price. This is necessary so that the trader can reduce risk by increasing collateral or reducing the position.

Liquidation can lead to a sharp change in price, which can affect the positions of other traders. Such a situation is called a cascading liquidation, the sharp and significant manifestation of which is called a squeeze😱

👉A short squeeze occurs when demand is higher than supply when short positions need to be covered, and a long squeeze is the opposite.

💡On March 5, big players deliberately brought $BTC to touch ATH to trigger a squeeze. This allowed for a major correction (-14.5%) in #Bitcoin which caused a reverse squeeze.