Coinkarma Founder Benson Sun: Liquidation Heatmaps Are Overrated in Usefulness

Odaily reports that Coinkarma founder Benson Sun stated that the usefulness of liquidation heatmaps is overrated. The dense zones are derived from historical trade data and assumed leverage multiples, and do not represent that a corresponding number of positions are still waiting to be liquidated.

He believes that position additions and reductions, margin top-ups, and changes in average cost will all cause liquidation ranges to shift, and the longer the time frame, the greater the error. Liquidation heatmaps are more suitable as auxiliary information for short-term market structure over the most recent 24 hours to 3 days, and should not occupy an overly large weight in a trading system.