A leveraged crypto trade is force-closed at a price set by three inputs, according to trading guides from Bitcoin Foundation and MenthorQ. The inputs are the entry price, the leverage and the margin, which is the collateral posted for the trade. In MenthorQ's worked example, a drop of about 10% is enough to erase the whole $1,000 margin on a 10x long bitcoin position.
Key facts, per Bitcoin Foundation
- What it is: An automatic close-out of a leveraged position once the trader cannot fund the margin.
- When it starts: When the account touches or drops under the exchange's maintenance margin. The trader need not act first.
- How much closes: The entire position, once that minimum is breached.
- Typical loss: Generally, all of the trader's original deposit.
How do I work out my own liquidation price?
MenthorQ gives a formula: Liquidation Price = Entry Price ± (Initial Margin / Leverage). It says the formula varies slightly by platform. Its example is a 10x long bitcoin position backed by $1,000 of collateral. After a drop of about 10%, that position is about $9,000 in value. The full $1,000 margin is then gone, so the exchange liquidates it. Bitcoin Foundation adds that most exchanges trigger liquidation on a mark price, described as "a reasonable value for the trade", not on the last traded price. The goal is to limit manipulation and needless liquidations. Plugging an entry price and a leverage into the 10x logic shows where the posted margin on a long would run out.
Where does the posted margin run out on a leveraged long?
Enter an entry price and a leverage to see the price at which the posted margin on a long would be gone.
| Your entry price | Leverage | Price where the posted margin is gone |
|---|---|---|
| 22,000 USD | 10 x | 19,800 USD |
| 18,000 USD | 10 x | 16,200 USD |
| 9,000 USD | 20 x | 8,550 USD |
- Long position; the price falls against it.
- The posted margin equals the position's value divided by leverage, as in MenthorQ's 10x example.
- No fees, no funding payments and no maintenance margin level; the result is where the margin reaches zero.
- The entry range stops at $22,000, the highest bitcoin price the guides cite; the formula works the same at any price.
An exchange may close the trade earlier, at a maintenance margin level neither guide states.
Does the platform wait until the margin is gone?
Bitcoin Foundation says the close begins once the account touches or drops under the maintenance margin, the minimum level the exchange requires. MenthorQ's 10x worked example ends at a later point, when the full $1,000 margin is gone. Stock accounts work with a published floor. The Financial Industry Regulatory Authority (FINRA) sets a general floor for margin accounts that hold only margin stocks. Equity must not drop under 25 percent of the current market value of the long securities, it says. That floor covers stock accounts. It is not a crypto rule.
Stop loss or liquidation: who closes the trade?
MenthorQ says manual stop losses help a trader get out before the exchange steps in. A stop loss is an order the trader places. A liquidation is run by the exchange. Bitcoin Foundation describes a stop-loss order as one that forces the trader to close the position once the price target is hit. It also warns that a fast forced close can suffer slippage. Slippage means the price achieved turns out worse than expected.
Cross margin and position size
MenthorQ says that under cross margin, the entire wallet balance can be drawn on to keep a position open. That raises the risk of a wipeout, it says. A separate explainer covers how cross and isolated margin differ. Bitcoin Foundation says limiting the money risked on one trade shrinks the possible loss if the price moves the wrong way.
How much leverage the guides mention
Bitcoin Foundation says, in a separate guide on bear markets, that exchanges sometimes offer leverage of as much as 10x, 20x or even 100x on positions. Its liquidation guide adds that many traders take on so much leverage that price shifts as low as 5–10% liquidate them. It cites no source for that range.
Why one drop can push prices further
Bitcoin Foundation ranks liquidation cascades among the biggest drivers of crypto market moves. It says over $19 billion of positions were liquidated in a single event during the October 2025 downturn. The page cites no source for that figure. MenthorQ describes how a cascade builds. Liquidated positions get sold. That selling drives prices lower, which sets off further liquidations.
MenthorQ reports that on June 18, 2022, bitcoin fell from about $22,000 to under $18,000 in a few hours. More than $600 million of long positions were liquidated across exchanges. The guide cites no source for either figure.
Backstops: partial closes and transfers to other traders
MenthorQ says some platforms may try to shrink a position before closing it fully. If the insurance fund cannot cover a loss, a position may be closed and handed to a trader on the other side of the book. It calls this rare. It happens in extreme stress.
Analysis: the real room is likely smaller than the example
MenthorQ's 10x example measures the move that empties the margin. Bitcoin Foundation places the close earlier, at the maintenance margin level, yet says traders generally lose all of their original deposit. If that level sits above zero, a 10x long would be closed by a drop smaller than about 10%. Neither guide explains how the earlier trigger and the full loss fit together. That makes the platform's own maintenance margin the number that decides how much room a trade has.
What is confirmed and what is not
Both guides tie the liquidation price to entry price, leverage and margin. Both describe cascades in which forced selling feeds more liquidations. Only Bitcoin Foundation mentions mark prices. Only MenthorQ describes partial closes and transfers to traders on the other side. The October 2025 and June 2022 figures each come from one guide, without a cited source. Neither guide gives a maintenance margin percentage, liquidation fees, a grace period after a margin call or current leverage limits for any platform.
Sources: What is Crypto Liquidation in Trading? (bitcoinfoundation.org), accessed Oct 14, 2026 · Understanding Crypto Liquidation Guide - MenthorQ (menthorq.com), accessed Oct 14, 2026 · Know What Triggers a Margin Call (finra.org), accessed Oct 14, 2026 · What Is a Bear Market and Why Is Crypto Crashing? - Bitcoin Foundation (bitcoinfoundation.org), accessed Oct 14, 2026
ZIPMEX promotes trading on trade.zipmex.com. Promotions are labelled and kept separate from news coverage, which is selected and checked without regard to them. Perpetual futures are leveraged derivatives. Prices can move fast and you can lose all of your margin. Not available in every jurisdiction. Not investment advice.
