Crypto glossary
Liquidation heatmap
A liquidation heatmap is a chart estimating where leveraged futures positions would be liquidated, shown as colored bands of intensity across price levels.
Data providers estimate liquidation levels by combining open interest, the prices where positions were likely opened and common leverage settings. The output is a heatmap over the price chart, with brighter bands marking prices where a large volume of longs or shorts would be force-closed. Because exchanges do not publish individual positions, these maps are models, not exact records.
Traders use them to anticipate where price might be pulled. Large clusters of liquidations act like magnets in the sense that reaching them triggers forced buying or selling, which can extend a move before it reverses. They are also used to place stops away from crowded zones and to understand sudden cascades after the fact.
The estimates rely on assumptions about leverage and entry prices that may be wrong, cover only exchanges that share data and change as positions open and close. Treating a bright band as a guaranteed target is a common misreading.
Example
A heatmap shows a dense band of short liquidations around 3,500 dollars on ETH. When price rallies into that zone, forced short covering accelerates the move by 4% in minutes before it fades.