{"slug":"liquidation-cascade","term":"Liquidation Cascade","category":"Derivatives","definition":"A liquidation cascade is a chain reaction where forced closures push price into the next cluster of liquidation levels, triggering more forced closures in the same direction. Each liquidation is a market order, so selling begets selling (or buying begets buying), producing the violent wicks that clear overleveraged positions in minutes.","street":"One liquidation knocks over the next like dominoes — that's your \"5% candle in 3 minutes\" mystery solved.","depth":["Cascades start where leverage clusters. Say longs are stacked at 20x from one tight range: a 3–4% dip triggers the first band of liquidations, each one a forced market sell that shoves price into the next band, which triggers more sells. The chain feeds itself until it reaches a zone with real resting bids. The billion-dollar liquidation days all follow the same shape — hours of grind, then minutes of vertical.","The tell before a cascade is rising OI plus one-sided funding pressing into an obvious level. The edge sits on the other side of it: cascades overshoot, and the reclaim after the flush — OI reset, funding back to flat — is one of the cleaner long setups in crypto. What costs money is knife-catching mid-cascade with leverage, because \"cheap\" means nothing while forced sellers are still in the queue. Let the wick finish printing first."],"live":{"label":"Let the radar catch the flush","href":"/radar"},"related":["liquidation","open-interest","stop-hunt","wick"]}