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U.Today - As Bitcoin trades in the $105,000 range, its price action is being closely watched, and liquidation heatmaps show some intriguing undercurrents. The 26 EMA, which has recently served as a crucial support zone, is where Bitcoin has stalled on the daily chart after a significant rally from its lows.
A decline in trading volume indicates market hesitancy. The Binance BTC/USDT liquidation heatmaps, however, tell the true tale. Thick liquidity clusters situated slightly above $110,000 and approximately $104,000 are highlighted on these maps. These are essentially traps for high-leverage traders, where a price spike will force out positions (liquidations), prompting a series of buys (or sells).
One possible cause of volatility is the enormous liquidity cluster at $110,000. There will probably be a rush of short position liquidations if Bitcoin can rise above this level. If it breaks through this resistance decisively, this forced buying could quickly send Bitcoin skyrocketing. This type of setup transforms short-term pain into a squeeze rally by causing abrupt wicks and quick momentum changes. Conversely, the liquidity and liquidations band at $104,000 establish a buffer below.
It might serve as the starting point for a run to $110,000 if the price tests this level and stays there. However, the liquidation zone is a double-edged sword, so if it breaks, be prepared for a quick trip to $100,000 and possibly lower. Since the market is still very hungry for leverage, Bitcoin is currently hovering around $105,000-$106,000.
We could be looking at a short squeeze situation that goes all the way to $110,000 if bulls can regain control. However, if bears continue to hold, a precipitous decline to less than $100,000 seems more likely. The heatmaps indicate that volatility is poised to blow up in either case.