The Mathematical Curse of Leverage Liquidation: Unveiling the Death Formula of 100x Contracts
When Bitcoin crashes by 1% at 3 AM, the liquidation alarm for 30x leverage players rings through the exchange—this is not an accident, but a precise hunting by a mathematical formula.
Behind using 5U to leverage a position of 47,000U at 100x leverage is the death equation where a 1% price fluctuation leads to a total loss of capital. The real safe leverage should follow:
Leverage limit = 1 / (Expected maximum fluctuation × 2)
If we anticipate a daily fluctuation of 5% for BTC, the maximum leverage is 10x—exceeding that is gambling.
Taking a 100x long position at 47,000U as an example:
Liquidation price = Opening price × [1 - (Margin × Maintenance margin rate) / Contract value]
The theoretical liquidation price is 42,302U (a drop of 10%), but the exchange's slippage + spike mechanism can cause the actual liquidation price to rise by 20%.
≤1000U: Leverage ≤10x, liquidation line far from opening price ±8% (e.g.: 47000U long position forced liquidation price < 43240U)
1000-10000U: Leverage ≤5x, enable 3% trailing stop-loss (47000U long position stop-loss at 48410U)
≥10000U: Leverage ≤3x, daily 20% of funds for arbitrage hedging (MicroStrategy uses only 2x leverage)
🚫 Leverage ≠ Courage, the formula determines life and death📉 A 5% price fluctuation immediately reduces leverage, liquidate 20% for every 1% drop💡 Ultimate understanding: Surviving with 3x leverage through bull and bear markets > 100x leverage liquidating ten times
When the market plunges again, smart money had already reduced leverage from 100x to 20x two hours in advance. Remember: in the battlefield of contracts, those who survive are always the dancers with shackles.
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