Liquidations

Definition

Futures contracts enable market participants to trade with leverage – that is, market participants are allowed to have a position with notional value greater than the amount of money they have in their account. This raises the possibility that market participants can lose more money than they have in their account. To address this possibility, exchanges which offer futures products have a liquidation system that will attempt to close a market participant’s position before the point at which the market participant begins to owe more than what is in the account.

If an exchange reports both liquidation orders and liquidation trades, we store both types of observations and differentiate the two types with the action column.


Details

A simplified example illustrates the process. Suppose a trader deposits $100 into an exchange and buys $10,000 worth of Bitcoin perpetual contracts resulting in a leverage of 100x. Also, suppose the current price of Bitcoin is $10,000. If the price declines to $9,900 (the “bankruptcy price”), the trader would be bankrupt. Therefore, the exchange sets the liquidation price for this trader’s position at $9,925 (the “liquidation price”). If the price declines to this liquidation price, the exchange will forcibly initiate a sell liquidation order to attempt to close the trader’s position.


API Endpoints

Futures

/market/futures/liquidations/information
/market/futures/liquidations/{instrument}

Options

/market/options/liquidations/information
/market/options/liquidations/{instrument}/latest
/market/options/liquidations/{instrument}/historical

Swaps

/market/swaps/liquidations/information
/market/swaps/liquidations/{instrument}/latest
/market/swaps/liquidations/{instrument}/historical


Availability

Our Liquidation endpoints are available via REST API for historical (time series) data as well as WebSockets for real-time data.

This table outlines how far back our Liquidation data goes across the different exchanges within the Futures, Options and Swaps markets:

ExchangeFutures Start Date*Options Start Date*Swaps Start Date*
Deribit2018-08-132021-11-18X
Binance2020-05-15XX
Bitmex2020-09-15X2020-09-18
FTX**2020-12-22XX
Huobi2021-01-04X2021-04-06
ByBit2021-10-05XX

*These dates represent the oldest start date we have for Liquidation data across all contracts
**As of 2022-11-12, we stopped supporting FTX, but historical data will remain available


Frequently Asked Questions

What is liquidation?

  • Liquidation refers to the activity of selling off crypto assets for cash to mitigate losses in the event of a market crash. However, in the crypto world, the term liquidation is mainly used to describe the forced closing of a trader’s position due to the partial or total loss of the trader’s initial margin. This happens when investors do not have sufficient funds to keep the trade open. Let’s address in detail what terms like margin, leverage means before going any further.

What is crypto margin trading?

  • Crypto margin trading is the process of borrowing money (typically from a crypto exchange) to trade a higher volume of assets. This method can provide the trader with increased buying power (or leverage) and the potential for greater profits. Of course, it comes with severe implications.

When does forced liquidation happen?

  • Liquidation happens when an exchange closes out a trader’s position because it can no longer meet margin requirements. Margin is the percentage of the total trade value that must be deposited with the exchange to open and maintain a position. When a trader’s margin account falls below a level previously agreed upon with the exchange, positions will automatically start liquidating. When leveraged position reaches the liquidation threshold, traders will face a “margin call,” which means they have to add more funds in order to increase margin.

How can I avoid being liquidated?

  • When using leverage, there are a handful of options available to mitigate the chances of being liquidated. One of these options is known as a “stop loss.” A stop-loss, otherwise known as a “stop order” or “stop-market order” is an advanced order that an investor places on a crypto exchange, instructing the exchange to sell an asset when it reaches a particular price point. When setting up a stop loss, you will need to input the stop price (the price where the stop loss order will execute), the sell price (the price at which you plan to sell a particular crypto asset) and the size (how much of a particular asset you plan to sell). If the market price reaches your stop price, the stop order automatically executes and sells the asset at whichever price and amount stated. If the trader feels the market could move quickly against them, they might choose to set the sell price lower than the stop price so it’s more likely to get filled (bought by another trader.) The primary purpose of a stop loss is to limit potential losses.