When mass liquidations occur in the market, loud numbers appear in the news feed:
“$2 billion liquidated in a few hours.”
In most cases, there is a feeling that this money has simply disappeared. But this is an illusion.
In the crypto market, money does not burn. It changes hands.
What really happens during a liquidation
Liquidation is the forced closure of a position at market price.
When a highly leveraged trader can no longer cover losses, the exchange closes their trade with a market order.
👉 And every market order is someone else's limit order.
That is:
someone loses their position
someone buys or sells at a favorable price
capital simply shifts from the weak side to the strong
Who gets money from liquidations
Counter-traders
Those who stood in the opposite direction without excessive leverage.
Market makers and algorithms
They provide liquidity and harvest liquidation waves like crops.
Traders with patience
Those who wait for panic and do not enter on emotions.
The market is not a casino. It’s a redistribution of risk.
Why are 'small' traders being liquidated specifically?
Most liquidations are:
high leverage (20x–100x)
lack of margin buffer
entry 'on emotion', not by plan
Even a price movement of 1–2% can wipe out a position.
Not because the trader 'was wrong about the direction', but because they did not give themselves time.
Liquidations are fuel for price movement
Paradoxically, mass liquidations:
accelerate the trend
create momentum
form local bottoms and tops
That is why after a 'cascade of liquidations' the market often:
bounces sharply
or ends the phase of panic
This is the moment when the impatient give money to the patient.
The main conclusion that is ignored
Liquidation is not punishment or a conspiracy of the exchange.
This is the result of poor risk management.
In futures, it’s not the one who guessed the direction that survives,
and the one who:
uses moderate leverage
understands where their liquidation is
ready to endure a few candles against oneself
Conclusion
In the crypto market, there is no 'burned' money.
There are only:
those who could not withstand
and those who waited
Liquidations are the moment of truth, where capital shifts into stronger hands.
And if you want to be on the right side of this process —
think not about profit, but about survival.
Do your own research (DYOR).#BTC #bdlyaw $BTC
