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Crypto Liquidation Price: How It Is Calculated

A liquidation price is the level at which an exchange would forcibly close a leveraged position because your margin no longer covers the required minimum. This guide explains a simplified version of that math — it is not an exact exchange formula.

6 min read

All prices below are illustrative examples, not current market data. This is a simplified educational model, not an exchange's actual liquidation price.

Key terms

  • Margin: the collateral you put up for the position.
  • Leverage: position value ÷ margin.
  • Maintenance margin rate (MMR): the minimum share of the position value that must remain as margin.
  • Long: profits if price rises. Short: profits if price falls.

Simplified formula (isolated margin)

The calculator assumes liquidation when equity (margin plus unrealized P&L) equals maintenance margin on the position at the liquidation price. Solving for that price gives:

Long:  Liquidation ≈ (Position value − Margin) ÷ (Quantity × (1 − MMR))
Short: Liquidation ≈ (Position value + Margin) ÷ (Quantity × (1 + MMR))
Position value
Entry price × Quantity
Margin
Position value ÷ Leverage, or the margin you enter
MMR
Maintenance margin rate as a decimal

Dividing through by quantity, a long position simplifies to Entry × (1 − 1/Leverage) ÷ (1 − MMR).

Example: long vs short

Worked example

1 BTC position at an entry of $30,000, 10× leverage, 0.5% maintenance margin

  1. Margin = 30,000 ÷ 10 = $3,000
  2. Long: (30,000 − 3,000) ÷ (1 × 0.995) ≈ $27,135.68
  3. Short: (30,000 + 3,000) ÷ (1 × 1.005) ≈ $32,835.82

Both are roughly 9–10% from entry. At 20× they would be about half as far away.

Why actual exchange liquidation differs

  • Exchanges trigger liquidation from a mark price, not the last traded price.
  • Tiered maintenance margin: larger positions often face higher MMRs.
  • Fees: liquidation and closing fees may be deducted, moving the price closer to entry.
  • Cross margin: other balances in the account can support the position, pushing liquidation further away.
  • Funding payments and partial liquidation rules change margin over time.

Always check the liquidation price shown by your exchange; the calculator's estimate is for understanding the relationship between inputs.

Calculator walkthrough

  1. Open the Crypto Liquidation Price Calculator.
  2. Choose long or short and enter entry price and quantity.
  3. Enter leverage, or the margin amount instead.
  4. Enter a maintenance margin rate from your exchange's documentation.
  5. Press Calculate to see the estimated liquidation price and its distance from entry.

Run your own numbers

Estimate the price at which a leveraged position could be liquidated.

Open Crypto Liquidation Price Calculator

Related calculators

Crypto Leverage CalculatorSee your effective leverage and the margin required for a position.Open calculator Crypto Margin CalculatorFind the margin needed to open a position at a given leverage.Open calculator Crypto Futures P&L CalculatorCalculate profit, loss and return on margin for a long or short futures trade.Open calculator

Frequently asked questions

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