TLDR: A liquidation heatmap estimates the price levels where leveraged positions would be force-closed, and shades them by how much size is stacked there: dark for thin, bright for dense. The bright bands mark "clusters" where a lot of leverage would get liquidated at once, which is why price often gets pulled toward them. The single most important thing to know is that a heatmap is a *model*, not a record: exchanges do not publish individual liquidation prices, so every cluster on the map is an estimate. This is education only, not a buy or sell call.
Liquidation heatmaps are one of the most visually compelling tools in crypto, and one of the most misread. Traders see a bright band, decide price "has to" go there, and treat an estimate as a prophecy. Used properly, a heatmap is a map of where leverage is fragile, not a schedule of where price will go. Here is how to read one, and exactly where its honesty ends.
What is a liquidation heatmap?
A liquidation heatmap is a chart that estimates, across a range of prices, how much leveraged position size would be liquidated if price reached each level. Price runs up the vertical axis, time along the horizontal, and a colour scale shows intensity, typically dark for low concentration and bright (toward yellow) for the densest liquidation zones.
It is built by aggregating open leveraged long and short positions across major futures venues and modelling, from leverage usage and position data, the notional value that would be force-closed at each price band. The dense bands that result are the "clusters." Providers such as Coinglass compute these across timeframes from hours to a year.
How do you read the clusters?
Read brightness as *fragility density*: the brighter the band, the more leveraged size is estimated to get liquidated if price reaches it.
- Bright clusters above price are pools of leveraged *shorts* that would be liquidated on the way up. If price rises into them, those shorts get bought back (forced buying), which can accelerate the move higher. - Bright clusters below price are leveraged *longs* that would be liquidated on the way down. If price falls into them, forced selling can accelerate the drop. - are price ranges where little leverage is parked, so there is less fuel for a self-reinforcing move.