$BNB
A liquidation heatmap displays price levels where large numbers of leveraged positions (both longs and shorts) could be liquidated if Bitcoin reaches those zones. The color gradient typically ranges from purple to yellow:
- Yellow/Red Zones: Indicate high liquidation density ("hot" levels). These often act as price magnets since liquidations can trigger cascading buy/sell orders.
- Purple Zones: Show fewer liquidations ("cool" areas), suggesting less potential market reaction.
### Why This Matters for Traders
1. Magnet Effect: Price frequently gets drawn toward high-liquidation zones as market makers hunt for liquidity.
2. Volatility Triggers: When price hits a yellow zone, rapid squeezes can occur (e.g., mass short liquidations causing sudden price spikes).
3. Hidden Support/Resistance: Reveals levels not visible on standard charts, offering strategic entry/exit points.
### Practical Use
Combine heatmaps with order book data to:
- Avoid stop-loss traps
- Anticipate potential reversals
- Spot high-probability breakout zones
