I'd always assumed that if in order to be liquidated BTC would need to go down 1/3 from my initial buy in but I just had a thought that got me concerned.
Let's say for arguments sake that I bought in $1000 with BTC price at $10,000 which has now doubled to $2,000 after Bitcoin went up to $13,333 (I'm not sure that my math is right but anyway).
I would assume that Bitcoin would have needed to go down $6,666 in order for my initial stake to be liquidated and I was assuming that this would still be the amount that Bitcoin would need to go to, however now I'm a bit worried that my initial stake is irrelevant and that Bitcoin would need to drop 33% from the $13,333 that it's at now in order for me to be liquidated meaning that no matter how high Bitcoin goes, if it goes down 33% from that high I could be liquidated.
Just in case that explanation wasn't clear enough, if you bought 1 BTC at a 2X leverage when BTC was $10k in October last year and rode it all the way up to $65k and you had something like $120k BTC at that point, would you then have been liquidated when BTC dropped over 50% to $29k or would your BTC have just gone down to the same as it would have been at $29k on the way up?
Is it possible that somebody could confirm which of these is correct please?
Thanks
Just for reference in this example. If you opened 2x long position at $10,000. The Liquidation price would be set at ~$6,690. Let say Bitcoin went all the way to $65K without ever crossing the $6,690 liquidation price, but then it started dropping from $65K to $20K. Your position would still be safe. The only difference will be the change in the value of your unrealized profit and maybe fees due to funding rate.
Your margin only gets liquidated once the mark price drops past $6,690