I want to talk to you about a concept that many people can’t quite figure out: what exactly does liquidation mean?

Suppose you have 10,000 yuan. You borrow 90,000 from an exchange to make a total of 100,000 and use it to buy Bitcoin. This is the so-called 10x leverage. But why would the exchange lend you money? Because they want to hedge their risk. So they set a liquidation price—once your assets fall to a certain point, the exchange will directly liquidate your position.

If Bitcoin drops 10%, you lose 10,000. Do you think that 10,000 is still in your hands? No—the exchange doesn’t wait for you to react. They immediately sell your 10,000 for U and recover the borrowed assets. Your margin is gone just like that. This is called liquidation.

But many people won’t accept it. Having lost 10,000, they borrow another 10,000 through an online lender, deposit it into the exchange as margin. This time, they take a bearish view of the market and borrow 90,000 worth of Bitcoin to sell it directly. Now they have 100,000 U in hand. As a result, Bitcoin rises 10%. With 100,000 U, you can’t buy back the Bitcoin that has already risen to 110,000. The exchange has no choice but to use your remaining 10,000 margin to buy Bitcoin and make up the shortfall. Another liquidation.

At this point, someone starts calling friends, asking for help. Borrow another 10,000. This time, they decide to open 5x leverage. But 3 days later, they get liquidated again. The borrowed money is gone—only an electric scooter remains. Without a helmet, they borrow 200 yuan from Huabei. And that’s how they enter the delivery rider team.

Every day, 7 a.m. to 10 p.m., and 5 yuan per order. After a year, they finally manage to save 100,000. This time, they sell the electric scooter, selling the helmet for 10 yuan to a coworker. Using 10x leverage, they’re extremely cautious. After 3 months, they’re still liquidated.

By then they’re already 28 years old. No girlfriend, no stable job. Watching others around them buy homes and get married, yet they are ruined because of contract trading. Every night, they can’t sleep, thinking about the moment when liquidation happened. Smoking, they ask themselves: Do I still have a chance?

Start all over again. Study trading books in earnest. Finally, they gather enough money and decide to take a gamble. Sometime in the deep dead of night, the exchange goes offline. Yet it’s still liquidation. Now all that’s left is a phone and a few hundred yuan. The rent next month still can’t be paid.

This isn’t a matter of luck. The essence of liquidation is: when your losses reach the margin threshold, the exchange will forcibly close all your positions. The money you borrowed—you have to pay it back. The higher the leverage, the faster the liquidation. Some people think they can predict the market, but in the end, the market just doesn’t play by the rules. Liquidation happens in that instant.

Many people still don’t understand what liquidation actually means. They think it’s just losing money. But it isn’t. Liquidation means your capital is forcibly liquidated, and the debts you owe still have to be repaid. That—truly—is despair.