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What Is the Impact of a Flash Crash on Margin Calls?

A flash crash accelerates margin depletion, leading to rapid, widespread margin calls and a high risk of immediate liquidation.
Greeks.Live22.11.25

What Is the Impact of a Flash Crash on Margin Calls?

A flash crash, a sudden and rapid price drop, can trigger a cascade of margin calls and subsequent liquidations very quickly. The speed of the price movement gives traders minimal time to meet the margin call by adding funds.

This can overwhelm the liquidation engine and quickly deplete the insurance fund, significantly increasing the risk of ADL or socialized loss.

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