Isolated margin ring-fences a fixed amount behind one position. If it goes, that amount goes and nothing else. Cross margin puts your whole available balance behind every open position, so equity anywhere supports risk everywhere.
How each one fails
Isolated fails by liquidating early. The position has only its allotted margin, so an adverse move that you would have survived with the full balance behind you ends it instead. You keep the account and lose the trade — sometimes a trade that would have worked.
Cross fails by liquidating everything. One position deteriorating draws on balance that other positions are also relying on, so a single bad trade can cascade into the whole book closing at once. You keep the trade open longer and risk the account.
There is no universally safer answer, which is why framing it as a safety setting misleads. It is a choice about which failure you prefer.
When each is right
Isolated suits a speculative position you have deliberately sized to lose — a thin token, a high multiple, a trade you would rather have closed than defended. The cap is the point.
Cross suits genuinely hedged books, where positions offset and forcing each to stand alone would liquidate one leg of a pair that was never at risk as a whole. It also suits a single core position where you want the full balance defending it.
The trap
Cross margin plus several correlated positions is the combination that empties accounts. Correlated positions do not diversify — in crypto, where a broad move takes almost everything the same direction at once, several positions can be one position wearing several names. Under cross, they draw on the same balance simultaneously, in the same direction, at the same moment.
That is the same reflexivity that turns a move into a cascade, only inside one account. And because the trigger is measured on the mark price, it can happen at a level your charts never printed.