@frost12dragon
Leverage liquidation cascades occur when highly leveraged positions are forcibly closed due to price drops, amplifying volatility. As prices fall, automated liquidations trigger further selling, creating a feedback loop. This exacerbates market downturns, as seen in the 2022 Terra collapse. Investors can mitigate risks by using lower leverage, setting stop-loss orders, and diversifying portfolios. Monitoring liquidation data helps anticipate volatility spikes, enabling proactive risk management.
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