Bankruptcy price is a risk-accounting reference where the collateral or equity assigned to a position would be exhausted under the venue’s calculation. In derivatives terminology, it describes a position-level threshold, not a legal declaration that the trader is bankrupt. Its exact definition depends on the contract and margin system.
A simplified zero-equity example
Suppose an isolated linear long represents one unit bought at 100 USDT and is supported by 10 USDT. Ignoring fees, funding and other adjustments, a price of 90 USDT creates a 10 USDT loss and exhausts that support.
This illustration is not a liquidation-price formula. Maintenance margin normally requires intervention before the theoretical zero-equity point. Cross-account support, other positions and collateral valuation can make the actual calculation more complex than this isolated example.
Reference price versus market execution
A venue may use bankruptcy price when transferring a liquidated position, allocating a deficit to an insurance fund or matching an auto-deleveraging reduction. It need not equal the price at which orders can actually execute in the market.
Execution better or worse than the relevant reference can create a surplus or shortfall handled under the venue’s rules. A displayed bankruptcy price therefore does not promise a guaranteed exit or maximum loss. Trigger price, transfer accounting and final execution should be understood as separate parts of the liquidation process.