@basilwinifred
Liquidation spikes often occur during moments of extreme leverage unwinding, amplifying market volatility. When large amounts of positions are forcefully closed, price momentum may overshoot fundamentals, creating potential reversal setups. Historically, liquidation cascades near local bottoms can exhaust selling pressure, paving the way for rebounds. Conversely, spikes at overheated peaks may accelerate declines before stabilizing. Tracking liquidation data alongside funding rates and open interest helps assess whether sudden surges mark exhaustion points, making it a critical indicator of trend inflection.
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