Lucas Kiely, CEO of Future Digital Capital Management, said the crypto market crash was a "wake-up call" to traders that high leverage is extremely dangerous in a illiquid environment. Nic Puckrin, analyst at Coin Bureau, pointed out that even profitable positions are subject to automatic deleveraging (ADL) forced position squaring, showing that risk management mechanisms are flawed.
The Block Research analysis said that large-scale liquidation events may involve institutions and market makers, whose leveraged positions are forced to position squaring, amplifying the price decline. When one round of strong equalization triggers the next round, the market has a self-reinforcing chain downward effect.
Analysts: High leverage is extremely dangerous in illiquid markets, and institutional liquidation amplifies the chain decline
2025-10-13 19:03:01
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