Crypto liquidation is a venue’s process for reducing or closing a leveraged position after the applicable account equity falls below its maintenance requirement. It is not simply a fixed percentage drop from entry. The result can depend on which price the venue monitors, contract size, margin mode, collateral, other positions, funding, open orders, maintenance tiers and the venue’s close-out procedure.
Initial margin sets entry capacity; maintenance governs an open position
Initial margin is the amount required to open a position under a venue’s rules. Maintenance margin is the ongoing requirement for keeping it open. Leverage describes exposure relative to allocated margin; it does not by itself specify an exact liquidation level. A venue can set different maximum leverage and maintenance requirements for different assets or notional tiers.
Account mode matters. In isolated margin, a position generally has its own assigned collateral under that venue’s rules. Cross margin can consider eligible account collateral, unrealized profit or loss, and other positions. The exact pool depends on the venue and account type. Adding funds, reducing a position, paying or receiving funding, or changing another cross position can therefore change an estimate while a trade is open.
The reference price matters too. Last trade, index and mark price are different concepts. A venue can calculate a mark from external prices and its own market data, and use that value for margin checks while the chart’s last trade differs. Hyperliquid, for example, documents mark-price liquidation and says its displayed estimate can change with liquidity, funding and other cross positions. Its own margin and liquidation pages describe its rules; apply those details only to the relevant contract and account mode, not to all exchanges. See its margining rules, liquidation process, contract specifications and robust price indices, checked on 25 September 2026.
A deliberately simplified threshold example
Consider a fictional linear long of one unit entered at $100 with $10 isolated collateral and a hypothetical flat 5% maintenance fraction. Ignore entry and exit fees, funding, liquidation fees, tier changes, slippage, open orders and all account-wide effects. If price is P, the simplified position equity is:
equity = $10 + (P − $100)
The hypothetical maintenance amount is:
maintenance = 0.05 × P
Set the two equal to find their crossing: $10 + P − $100 = 0.05P, so P = $90 ÷ 0.95 = $94.74 (rounded). This crossing is an educational threshold under the assumptions above. It is not a prediction, exchange liquidation quote or safe stop level.
At a hypothetical mark of $93, the same arithmetic gives $3 of equity against $4.65 of maintenance. In a live account, the venue’s own price source, equity definition, tiers, collateral treatment, fees, funding and liquidation actions control. The displayed estimate may move when those inputs change.
Liquidation is a process, not just a number
After the maintenance condition is breached, the venue may cancel orders, submit close-out orders, reduce the position partially, transfer risk to a backstop mechanism, charge fees, or follow another documented sequence. Do not assume every venue immediately closes the entire position at one calculated price. Hyperliquid’s documentation, for example, describes an initial attempt to close positions on the order book, possible partial fills, and a separate backstop process at a further threshold. Those are Hyperliquid-specific mechanics, and the documentation may change.
A liquidation price shown before entry is an estimate based on the information and liquidity then available. After entry, it may still change with funding, account equity and other positions. During a fast market, an order can fill at a different price from the threshold that started the process. Record trigger condition, order submission, partial fills and completed position separately when reviewing an event.
A stop may sit above the threshold and still fail to protect
In the fictional example, a planned stop trigger at $95 sits above the simplified $94.74 crossing. If price moves gradually and the stop order executes, it might reduce the position first. But suppose the last observed price is $96 and the next relevant market observation is $93. The move crossed both levels. The trigger is not a guaranteed fill at $95: a stop-market order can execute beyond the trigger, while a stop-limit may not fill. If the venue’s mark-price or account-equity condition is reached before the order completes, liquidation can begin first.
This is a possible path, not an event probability or a forecast. Gaps, thin liquidity, order rejection, latency, trigger-price choice and the venue’s process all matter. The stop-versus-liquidation guide explains trigger, fill and gap distinctions in more detail.
Verify the exact contract before interpreting an estimate
For a venue-specific review, write down the exact perpetual or futures contract, direction, quantity, entry, collateral asset and amount, account mode, applicable maintenance tier, mark-price rule, open orders, current funding and relevant fees. Then confirm how the venue defines account or position equity, when it checks the threshold, and what its close-out process does after a breach. Recheck the official documentation and account display at the time you need the answer.
The SuperQuant research engine uses an educational isolated-margin model with a flat maintenance proxy and hourly-candle assumptions. Its calculation does not reproduce every venue’s mark price, tiered requirement, open-order treatment, cross-margin balance, partial liquidation or actual order-book fill. Its bundled histories are synthetic. Treat its output as a result of that model, not a quote for a live exchange account.
The CFTC’s virtual-currency risk advisory notes that volatility can amplify gains and losses in margined futures and that customers may need to replenish margin or close positions. Its discussion does not define every crypto product, platform or jurisdiction. This article is general education, not personalized financial advice or a safety guarantee. Continue with cross versus isolated margin and leverage versus position size.