Bitcoin Liquidations Prove Difficult to Predict with Single Metric
A recent study analyzed seven major Bitcoin liquidation events and found that no single indicator can reliably predict sharp declines.
The researchers examined price, leverage, and order flow data but discovered no clear warning signs before the events. In six of the seven cases, however, volatility in market orders decreased beforehand, suggesting a weak precursor to the crashes.
Price trends showed slowing momentum in five of the seven instances, while two were triggered by unexpected external shocks, including tariff-related news.
The study's findings suggest that markets tend to grow quieter before a crash, but accurately predicting the next liquidation event remains difficult. The researchers warned that warning signals based on price or leverage may fail when selloffs are driven by external factors such as macroeconomic news or policy announcements.