Margin Calls: A Warning of Forced Selling and Leverage Risk

A margin call is a warning from an exchange that a trader's open leveraged position can no longer be supported by their collateral. This notification comes when equity falls below the exchange's maintenance threshold, requiring additional funding or reduction in position size.

On major exchanges like Binance and Bybit, maintenance margins for large-cap pairs such as BTCUSDT start at 0.5 percent of position value and rise with notional size. The October 2025 liquidation cascade wiped out approximately $19.3 billion in leveraged positions within 24 hours after traders ignored or couldn't meet margin calls.

A trader's ability to respond quickly to a margin call is crucial, as crypto markets never close, and volatility can lead to rapid price movements. For instance, on October 11, 2025, bitcoin fell from around $122,000 to under $105,000 in a matter of hours.