What Is the Term for an Account Balance Becoming Negative after Liquidation?
The term for an account balance becoming negative after liquidation is "negative equity" or "bankruptcy." This occurs when the exchange cannot close the position at a price better than the bankruptcy price (where margin is zero), leading to a loss greater than the initial margin. This deficit is typically covered by the exchange's insurance fund.
Glossar
Negative Equity
Impairment ⎊ Negative equity in cryptocurrency, options, and derivatives arises when the marked-to-market value of an asset or position falls below the initial investment or the outstanding liability, creating an unrealized loss.
Account Balance
Holding ⎊ An account balance represents the aggregate value of a trader's assets and liabilities held within a specific platform or exchange.