According to Foresight News, the chairman of the U.S. Senate Banking Committee, Tim Scott, announced that the bill on the structure of the cryptocurrency market is expected to be completed before September 30. This deadline is later than the initial goal of U.S. President Donald Trump to finalize the bill before the August congressional recess, but earlier than the previous prediction by Senator Cynthia Lummis to complete the bill before the end of the year.
Liquidations occur when a trading position (buy or sell) is automatically closed because the asset's price has reached a level where the trader can no longer maintain the position due to a lack of margin (i.e., the funds necessary to maintain the position). This commonly happens in markets with leveraged trading, such as Forex, cryptocurrencies, or futures.
How do liquidations affect the chart?
When there is a massive liquidation of long positions (buys), it means that many traders have been forced to close their buy positions because the price has fallen below their margin level. This increases selling pressure in the market, which can cause the price to drop even further. This is reflected in the chart as a bearish movement.
Conversely, if there is a massive liquidation of short positions (sells), it means that traders who had bet on a price drop have been forced to close their positions because the price has risen above their margin level. This increases buying pressure in the market, which can cause the price to rise even further. This is reflected in the chart as a bullish movement.
Do liquidations "move" the chart? Not exactly. Liquidations are an effect, not a cause. The chart shows changes in the asset's price, and liquidations are a factor that can contribute to those changes. But there are many other factors that also influence the price, such as: Supply and demand: The basic balance between buyers and sellers. News and events: Such as economic data, political decisions, etc. Market sentiment: The collective psychology of investors.
In a liquidation chart, like the one you mentioned earlier, you can see spikes that represent moments of massive liquidation. These spikes can coincide with significant price movements.
Supply: It is the quantity of an asset that sellers are willing to sell at a given price.
Demand: It is the quantity of an asset that buyers are willing to buy at a given price.
Example: If there are more buyers than sellers for a specific asset (high demand and low supply), the price of the asset will tend to rise. Conversely, if there are more sellers than buyers (high supply and low demand), the price of the asset will tend to fall.
2. Economic factors Economic indicators: Data such as gross domestic product (GDP), inflation rate, unemployment level, and retail sales can affect the market. For example, strong economic growth can increase the demand for stocks and corporate bonds, as companies tend to be more profitable.
Monetary policy: Central bank decisions, such as setting interest rates, have a significant impact. An increase in interest rates can make government bonds more attractive and cause investors to withdraw funds from other assets.
Example: If the central bank decides to lower interest rates, loans become cheaper. This can stimulate the economy and increase demand for goods and services, which in turn can cause stocks to rise.
First step - Identify the overall trend with whale orders and long-term liquidations: Analyze the whale order and liquidation charts in higher timeframes (such as 15 minutes or 1 hour) to determine the overall trend. For example, if whales are accumulating and buy liquidations are predominant in the 1-hour chart, the overall trend is bullish. This will give you a perspective on the larger context in which your scalping operations will take place.
Liquidation chart *Anticipate order entries and exits: Observing liquidation spikes on the chart can reveal moments when there is significant selling or buying pressure in the market. For example, if there is a buying liquidation spike at a certain price, it may indicate potential support. In scalping, you can anticipate that the price will bounce from that level and look for buying opportunities just before it happens.
*Identify trends: If you notice that buying liquidations are predominant and increasing over time on a lower time frame chart (such as 1 minute or 5 minutes), this could reflect a strong bullish trend. In this case, you prepare to enter long positions on pullbacks, as the price is likely to continue rising driven by bullish liquidations.
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1. Fake Walls (false liquidity walls) *Institutions place large limit orders at a visible price level on the map (for example, a large sell order). This creates an apparent resistance wall, leading traders to think: "It's going to go down, I better sell or open a short" But many times, those orders are canceled just before being executed, and the price ends up going in the opposite direction.
This is called spoofing (prohibited in regulated markets, but common in crypto).
2. Liquidity grabs
If they see many buy orders below (strong support), they can deliberately push the price down (with aggressive selling) to: Hunt stop-losses. Fill their own buy orders at a better price. Then, once they capture that liquidity, the price quickly reverses upwards.
This movement is sometimes called "stop hunt" or "spring" in Wyckoff analysis.
🎯 How to protect yourself?
*Do not blindly trust the map. View it as one more indicator, not as absolute truth.
*Look for confirmation: if there is a large order, observe if the price really reacts as it approaches.
*Watch for quick changes: if an order constantly appears and disappears, it’s probably a trap. *Combine with real volume and price action to validate the intent
(also known as limit order heatmap or order book heatmap).
🧠 What is a liquidity map?
It is a visual representation of the order book of a trading pair, such as BTC/USDT, that shows you where the buy and sell orders are located and how much "strength" they have at each price level.
🟠 What do the colors mean?
Brighter or more intense colors (orange, red, yellow):
indicate that there is more liquidity at that price level (more limit orders). In other words, more people want to buy or sell at that point.
Dark or colorless colors:
Little or no liquidity at that price. There is no strong interest at that level.
📊 How to interpret it? 1. Resistance zones (sellers) If you see a bright line above the current price, there are many wanting to sell there. That acts as resistance: it will be difficult for the price to rise because it will encounter many sell orders.
2. Support zones (buyers) If you see a bright line below the current price, there are many wanting to buy there. That acts as support: it will be difficult for the price to fall because it will encounter many buy orders.