“A billion was liquidated.” A billion of what, exactly?
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A headline-grabbing figure next to $BTC can easily turn into a story about a billion in lost savings. But first, you need to read the definition of the metric.
Liquidation statistics usually report the monetary value of positions forcibly closed. This is different from the participants’ own collateral.
For example: 100 $USDT in collateral can control a 1,000 $USDT position at 10x leverage. The two amounts already differ tenfold when the position is opened. When it is liquidated, the value is recalculated according to the instrument’s rules and the execution price.
So you also can’t divide the total liquidation volume by some arbitrary leverage and call the result an exact loss. To calculate that, you would need the actual collateral amounts, margin modes, executions, and expenses of all participants.
A large figure may describe a serious event, but it does not automatically answer how much of participants’ own money was lost or how much money left the platforms.
Before reposting the next headline, ask: is the source counting position value, collateral, or actual losses?
...
A headline-grabbing figure next to $BTC can easily turn into a story about a billion in lost savings. But first, you need to read the definition of the metric.
Liquidation statistics usually report the monetary value of positions forcibly closed. This is different from the participants’ own collateral.
For example: 100 $USDT in collateral can control a 1,000 $USDT position at 10x leverage. The two amounts already differ tenfold when the position is opened. When it is liquidated, the value is recalculated according to the instrument’s rules and the execution price.
So you also can’t divide the total liquidation volume by some arbitrary leverage and call the result an exact loss. To calculate that, you would need the actual collateral amounts, margin modes, executions, and expenses of all participants.
A large figure may describe a serious event, but it does not automatically answer how much of participants’ own money was lost or how much money left the platforms.
Before reposting the next headline, ask: is the source counting position value, collateral, or actual losses?