The $BTC
liquidation heatmap is a valuable tool for understanding market sentiment and predicting potential liquidation zones. It visually represents the likelihood of price levels where traders' positions may be liquidated, with the color spectrum ranging from purple (low risk) to yellow (high risk).
Purple Zones: These represent areas where there are fewer liquidations expected, indicating less market pressure and lower risk of price dips triggering large-scale liquidations.
Yellow Zones: These areas signal a higher risk of liquidation events, as they represent price levels where a significant number of traders may have their positions wiped out. This often indicates high volatility or potential flash crashes.
Using the heatmap, traders can better assess potential risks and prepare for possible price movements based on the liquidation levels. It's especially useful for identifying when a market is at risk of sudden price shifts, helping traders decide when to exit or adjust their positions.
