Liquidation is the process of converting assets into another form, whether that be fiat or another asset (USDT, BTC, etc). It involves selling off holdings, often rapidly, to generate funds or change the composition of an investment. This can happen in various contexts.
In financial markets, liquidation can refer to closing out a position, such as selling all shares of a stock, or dissolving an entire portfolio of investments. The goal of liquidation is to quickly access the value represented by the assets and convert it into a different asset, even if it means potentially accepting a lower price than might be achieved through a more gradual process. It's often a necessary step in situations like bankruptcy, portfolio rebalancing, or when an investor decides to exit a particular market or investment.