A quick note: During this round of volatility in the $ETH perpetual contract, a short position worth $2.1 million was liquidated.
People often ask what liquidation means. Here’s how I understand it.
When prices fluctuate sharply, liquidations often happen in clusters: a batch of positions gets closed, pushing prices further and triggering the next batch.
The price zones where liquidations cluster are often used afterward as reference points for short-term support and resistance, but whether they actually hold depends on subsequent buying and selling.
The same reading can mean very different things in different market conditions, so don’t apply any one rule blindly.
People often ask what liquidation means. Here’s how I understand it.
When prices fluctuate sharply, liquidations often happen in clusters: a batch of positions gets closed, pushing prices further and triggering the next batch.
The price zones where liquidations cluster are often used afterward as reference points for short-term support and resistance, but whether they actually hold depends on subsequent buying and selling.
The same reading can mean very different things in different market conditions, so don’t apply any one rule blindly.
