ONCHAIN TRADE DOJO logo
Risk Management

What is Liquidation Cascades?

Reviewed by the ONCHAIN TRADE DOJO team · Updated March 12, 2026

Chain reactions of liquidations causing extreme price swings – often creating long wicks.

Example

Bitcoin's price drops below a zone where many leveraged longs have their liquidation price. Those get force-sold, pushing price lower — which triggers the next wave of longs. A chain reaction forms: in minutes the price falls several percent, often with long wicks. You can spot such cascades after the fact from drops in open interest and spikes in liquidation volume.

Related terms