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Lets say I'm a knight and I die with Amulet of Loss on me, but I had 0 capacity left. Together with losing a level, I lose 25 of available cap, but AOL weights only 4.20 oz. So do I spawn with -20.8 cap?

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No, you will enter with you cap on 0 market with red color, same as happens when you the imbuement of the backpack over.
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