How to read a liquidation heatmap
- A liquidation heatmap shows where forced closes have clustered, at what distance from the current price.
- Darker or brighter cells mean more liquidated volume happened near that price level.
- It's a map of what already happened (or an estimate of leveraged clustering), not a prediction of what price will do next.
- Big clusters just above or below price are watched because a move that far can trigger more forced closes in the same direction.
Liquidation heatmaps look intimidating the first time you see one — rows of colored blocks next to a price chart — but the idea behind them is fairly simple once you know what's actually being counted.
What's being plotted
A liquidation heatmap takes a stream of liquidation events — forced closes of leveraged positions, reported by exchanges the moment they happen — and buckets them by two things: how much notional value was liquidated, and how far the liquidation price was from wherever the market is trading right now. Bucket by price distance (say, in 0.5% steps above and below the current price) and by time, and you get a grid: one axis for price offset, one for time or for each coin, and color intensity for how much got liquidated in that bucket.
Our trading terminal heatmap works exactly this way — it listens to the same live Binance and Bybit liquidation streams as the terminal's liquidation feed, and colors each cell by how much liquidated volume has landed in that price bucket during the selected window.
Why the clusters form where they do
Liquidations aren't randomly scattered — they cluster at specific prices because that's exactly where leveraged positions are mechanically designed to close. A trader who opens a 20x long has a liquidation price roughly 5% below their entry (before fees and funding); thousands of traders entering around similar levels with similar leverage means thousands of liquidation prices bunched together. When price actually reaches one of those bunched levels, a lot of positions close at once — which is the cluster you see lighting up on the heatmap.
This is also why heatmaps sometimes look like they "predict" a move: a large cluster just below price can act like a magnet in the sense that if price drifts down toward it, the cascade of forced selling as it's hit can accelerate the move — briefly overshooting before buyers step back in. That's a real, mechanical effect. It's not the same as the heatmap forecasting direction.
What a heatmap does not tell you
- It doesn't tell you which way price is going. Clusters exist on both sides of price at any given time — above and below. Seeing a cluster doesn't mean price is headed there; it means if price got there, something would likely happen.
- Live, exchange-fed heatmaps only show what already happened. They're a record of past forced closes, not a live map of every open position's exact liquidation price — exchanges don't publish that. Estimated heatmaps (the kind that project where clusters probably sit before they're hit) make assumptions about leverage and entry distribution that won't always match reality.
- Quiet doesn't mean safe. A cell with no color yet just means no liquidation has happened there during your chosen window — it doesn't mean there's nothing sitting at that level.
A simplified example
Say BTC is trading at $60,000 and the heatmap shows a bright cluster at the "-3%" column ($58,200) that's been building for the past hour, with nothing nearly as bright above price. That tells you a meaningful amount of long liquidations have already happened right around $58,200 during that window — useful context if you're watching for a level where selling pressure from forced closes has been concentrated. It doesn't tell you whether price is about to revisit that level, or what happens after it does.
Key takeaway
A liquidation heatmap is a read on where leveraged positions have been forced closed, clustered by price — a window into positioning and past forced-selling pressure, not a forecast. Pair it with open interest and the long/short ratio for a fuller picture of how a market is actually positioned before drawing any conclusions.