@ostbite77
Leverage liquidation cascades in cryptocurrency markets occur when highly leveraged positions are forcibly closed due to price drops, triggering further sell-offs and amplifying volatility. These cascades, often sparked by market shocks, exacerbate price declines as automated liquidations hit stop-losses and margin calls. To mitigate risks, investors can reduce leverage, diversify portfolios, and use stop-loss orders strategically. Monitoring on-chain data, like leverage ratios, helps anticipate potential cascades. Robust risk management, including real-time market analysis, is crucial to safeguard against rapid asset devaluation during volatile periods.
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