How Does the Use of High Leverage Affect the Velocity of a Crypto Price Crash?
High leverage means a small price movement can lead to a large percentage change in the account equity. When prices drop, high leverage quickly triggers margin calls and liquidations.
Since liquidations are often automated and immediate, they inject large sell orders into the market at speed. This rapid, forced selling accelerates the price crash, increasing its velocity significantly compared to unleveraged selling.
