Leverage is described as multiplying gains and losses, which is accurate but incomplete. Its more important effect is defining the distance the price can travel before the position is closed for you.
Collateral defines the buffer
A leveraged position is funded partly by the trader's collateral and partly by borrowed value, and losses are deducted from the collateral first.
When those losses approach the collateral, the exchange closes the position to prevent the loss exceeding what was deposited.
The price at which that happens is the liquidation price, and it follows directly from how much collateral backs the position size.
The distance shrinks faster than leverage rises
At modest leverage, the market can move a long way before the buffer is exhausted, and ordinary volatility is survivable.
At high leverage the buffer is a small fraction of the position, so a move of a few percentage points is sufficient to close it entirely.
At extreme settings the liquidation price sits so close to the entry that routine noise on any active market will reach it.
Funding and fees erode the buffer over time
Perpetual positions pay or receive funding at intervals, and payments made are deducted from collateral.
A position held on the crowded side of the market therefore moves closer to liquidation each period even when the price has not changed.
Trading fees and any borrowing cost work the same way, which is why high leverage held for a long time is a different proposition from high leverage held briefly.
Liquidation is a forced market order
The closing trade executes against whatever depth exists at that moment, so the realised price can be worse than the calculated liquidation level.
Where many positions share similar liquidation levels, they close together, and the resulting flow moves the price further into the same range.
That cascade is why liquidations cluster into brief violent moves rather than being spread evenly through a decline.
Margin mode determines what is at stake
Isolated margin confines the collateral to a single position, so a liquidation ends that position and leaves the rest of the account untouched.
Cross margin draws on the whole account balance, which pushes the liquidation price further away but places everything behind that one position.
Neither is safer in general terms; they differ in whether a single bad outcome is contained or shared across everything held.