Mechanics of a Crypto Crash
An interactive replay of a real BTC liquidation cascade. Drag the timeline to see how forced selling destroys orderbook liquidity and causes prices to collapse.
What Happened Here?
The Liquidation Cascade Explained:
- A trader borrows money to buy Bitcoin using leverage (e.g. 10x). They only put up 10% of the position as collateral.
- The price drops and hits the trader's "liquidation price" — the level where their collateral no longer covers the loan.
- The exchange forcefully sells their entire Bitcoin position at market price. This is a "market sell" order that hits the best available buyers.
- This selling eats through the orderbook — the green "depth" area represents waiting buy orders. Each forced sale removes more buyers.
- The price drops further, which triggers more liquidations from other traders. This creates a cascading chain reaction.
- The orderbook hollows out — with fewer buyers remaining, each subsequent liquidation moves the price even more. This is the "liquidity vacuum."
- Eventually the cascade exhausts — either all leveraged positions are liquidated, or new buyers step in at lower prices to absorb the selling.
Why This Matters for Traders
Understanding liquidation mechanics helps you avoid being liquidated yourself. By monitoring orderbook depth and open interest, you can identify when cascade risk is elevated and reduce your leverage accordingly.
Cascades create predictable, violent price dislocations. Traders who understand the mechanics can identify post-cascade liquidation levels and place limit orders to catch the bounce — buying from forced sellers at extreme discounts.
Build With This Data
Every data point in this visualization is available via our API
Access real-time trades, liquidations, and 20-level orderbook depth for BTC, ETH, SOL, and HYPE.
Build your own liquidation monitors, cascade alerts, and trading bots.
GET /v1/signals/imbalance?coin=BTC
{"imbalance": 0.42, "signal": "bid_heavy"}GET /v1/signals/liquidations?coin=BTC
{"alerts": [...], "cascade_risk": "HIGH"}GET /v1/signals/depth?coin=BTC
{"depth_bands": [...], "total_depth": ...}Explore More
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