Liquidation crisis in extreme market conditions
Case background: In December 2024, Bitcoin's price plummeted over 30% within 24 hours, triggering liquidation for 572,000 people across the network, with total losses reaching $4.5 billion. This drop far exceeded the scale of 100,000 liquidations during the '312 Panic' in March 2020, with many investors being forcibly liquidated due to high leverage and lack of stop-loss settings during severe price fluctuations.
Risk point analysis:
High leverage amplifies risks: Some traders use 100x leverage, resulting in a 100% change in account equity for every 1% price fluctuation. When Bitcoin drops from $30,000 to $20,000, a long position with 100x leverage is completely liquidated after a 10% price drop.
Failure to set stop-loss in time: Some investors, due to a sense of luck, did not set stop-loss levels, trying to hold positions while waiting for a rebound, and ultimately faced forced liquidation due to insufficient funds.
Coping methods:
Reasonable use of leverage: For short-term trading, it is recommended to use 5-10x leverage, set profit targets at 20%-50%, and avoid excessive risk amplification.
Strict stop-loss: Set stop-loss levels based on technical analysis, such as stopping below key support levels by 5%, or dynamically adjusting stop-loss levels using the ATR indicator.
Market manipulation and scam platform traps
Case background: In the fraud case of 'OURBIT Digital Currency Trading Platform' judged in April 2025, the criminal gang induced nearly 30,000 investors to participate in high-leverage trading by forging candlesticks and creating 'spikes' and 'slippage', with an amount involved reaching 460 million yuan. The platform was actually a closed betting game with no real trading with the external market, and user losses directly entered the platform's pockets.
Risk point analysis:
Fake trading data: The platform forges candlestick charts based on Bitcoin prices, fabricating the illusion of trading for 9 types of virtual currencies, creating a false appearance of professionalism and compliance.
Market manipulation: Creating severe price fluctuations through data manipulation, such as a sudden drop when users go long, leading to liquidation.
Coping methods:
Choose compliant platforms: Prioritize exchanges that hold licenses and have publicly audited reports, such as KuCoin, which has passed the EU MiCA framework review, and HTX, which has been selected as one of Forbes' most trusted exchanges.
Beware of unusual fluctuations: Remain vigilant against sudden large price fluctuations, such as short-term rises or falls exceeding 20%, to avoid following the trend in trading.
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