MERL (MERL) Liquidations

Liquidations occur when a leveraged position's losses approach the deposited margin. When the mark price reaches a trader's liquidation price, the exchange forcefully closes the position to prevent further losses beyond the collateral. On Hyperliquid, liquidation is handled by the decentralized liquidator system.

A high volume of liquidations can create cascading effects. When multiple positions are liquidated simultaneously, the resulting market orders can push the price further in the same direction, triggering more liquidations. This is commonly referred to as a "liquidation cascade" or "liquidation squeeze" and is a key driver of sharp price movements.

Monitoring MERL (MERL) liquidation data can provide valuable insights into market structure. Large clusters of liquidations at specific price levels act as "magnets" that price tends to gravitate toward, as market makers and larger traders are aware of these levels and may intentionally drive price toward them.