Leverage & trading · 6 min read · Live · Bybit only

How to read Bitcoin liquidations

One-minute answer: A liquidation is a forced closure of a borrowed Bitcoin bet because the trader no longer has enough money left to cover the loss. Long liquidations happen when price falls; short liquidations happen when price rises.

What it actually means

A trader using leverage controls a larger position than the cash they put down. The exchange lends the difference, but it will not wait for the trader's balance to go below zero. When the loss reaches the exchange's safety line, the exchange closes the position automatically. That forced closure is a liquidation.

A long bet expects Bitcoin to rise. A short bet expects Bitcoin to fall. Price falling can liquidate longs; price rising can liquidate shorts. The dollar amount tells you how much position value was forced shut during the period shown, not how much cash traders personally lost.

What to look for

Large long-liquidation bar — A sharp fall forced many rise-bets to close. Those closures can add more selling into an already falling market.
Large short-liquidation bar — A sharp rise forced many fall-bets to close. Buying back those shorts can push the rise faster.
Many bars in a row — This is a cascade: one price move triggers closures, those closures move price again, and the next group is forced out.
Small bars — Leverage is being cleared without a major forced-closure event on this exchange.

Worked example

Suppose Bitcoin falls 4% and the chart shows $180 million of long liquidations during that UTC day. That means Bybit force-closed about $180 million of rise-bets as price fell. It does not mean every Bitcoin exchange liquidated $180 million, and it does not mean traders lost exactly that amount in cash.

What this cannot tell you

The chart covers Bybit only. A market-wide total would need the same data from every major derivatives exchange.
A liquidation spike explains forced position closures; it does not prove what started the price move.
A quiet liquidation chart does not mean the market is safe. Traders may have low leverage, or the pressure may be on another exchange.

Data source

Bybit public liquidation stream, recorded by SafuTrading and grouped by UTC day into long and short forced closures.

Open long vs short liquidations — Dollar value of forced closures on Bybit, split into long and short bets.