What is liquidation in crypto?

How the liquidation price is calculated

A leveraged position is liquidated when its loss equals the margin you put up. With leverage L, that happens after a price move of 1 ÷ L against you. So in the simple model Staxo uses:

• Long: liquidation price = entry × (1 − 1 ÷ leverage)
• Short: liquidation price = entry × (1 + 1 ÷ leverage)

At 5x, a move of 20% against you closes the position. At 2x it takes 50%. A 1x long has no liquidation price above zero. With Bitcoin at its Oct 10, 2026 close of $82,913, a 5x long opened there would be liquidated at $66,330 and a 5x short at $99,495. Real exchanges also keep a small maintenance margin and fees, so their liquidation price sits a little closer to the entry than this.

How often leveraged trades were liquidated in 12 months

The test: open a position at every daily close from Oct 10, 2025 that had 30 more days of data after it (336 entries per coin), and check whether any of the next 30 daily closes reached the liquidation price.

On Cardano, a 5x long was liquidated within 30 days 33% of the time, on Bitcoin 19%. No 2x long was liquidated within 30 days on any coin: none of them fell 50% inside a month. A 5x long opened at the first close of the window on Bitcoin was gone by Nov 20, 2025, long before the year's low. Shorts were not safe either: rallies of 20% inside a month still caught 5x shorts in a falling year.

Why daily closes understate it

The table only looks at closing prices. A real position can be liquidated by a brief drop during the day that recovers by the close. Staxo checks open positions against live prices every 5 minutes, and exchanges check continuously. Run the same Bitcoin test on the daily lows instead of the closes and the 5x long liquidation rate rises from 19% to 24%.

How to practice it in Staxo

Staxo Pro lets you open long and short positions at 1x, 2x and 5x with demo money. Every open position card shows its liquidation price and how far away it is, for example "Liquidation at $80.00 (20.0% away)", and Pro sends a push notification when a position is liquidated.

A good first exercise: open a 5x and a 1x position of the same size on the same coin and watch both through a normal week. The 5x one shows how quickly an ordinary move becomes a large share of your margin. On the free plan, the same lesson works with the numbers: open any of the coin pages and look at the days with a move over 5%: each one would have cost a 5x position a quarter of its margin or more.

Free on iPhone and Android, $500 in demo money. Also on Google Play.Also on the App Store.