Liquidity Heatmap
A liquidity heatmap paints where forced orders are likely stacked: each bright band is estimated liquidation liquidity — resting fuel that price tends to seek out before reversing.
How the Map Is Constructed
Exchanges don't publish liquidation prices, so heatmaps are models: take open interest and recent entry-price distribution, assume a leverage mix, and compute where each cohort's liquidation lands. Aggregated across positions, clusters emerge at round leverage multiples below and above heavily-traded zones.
Brightness encodes estimated notional liquidatable at each price. Bands refresh as positions open, close and get liquidated — a bright zone that price consumes disappears from the map.
Why Price Seeks the Light
Liquidations are guaranteed market orders. For anyone needing to fill size, a dense liquidation cluster is a liquidity pool — pushing price into it triggers forced orders to trade against. This is why price so often wicks into a bright band and reverses: the liquidity was the destination.
The corollary: a heatmap is a map of magnets, not a directional forecast. Price tends to visit the nearest dense cluster — in either direction — before the larger trend resumes.
Key Points
Heatmaps estimate liquidation prices from OI and assumed leverage — treat bands as zones with error bars, not exact triggers.
Dense clusters attract price because forced orders are guaranteed liquidity. Wick-into-band-and-reverse is the signature pattern.
Once a cluster is liquidated, its liquidity is spent. The map after a cascade looks nothing like the map before it.
FAQ
They are estimates built from open interest and assumed leverage distributions. Cluster locations are directionally reliable; exact prices and sizes are not. On-chain venues like Hyperliquid are the exception — their liquidation prices are real.
The bright zone was the trade's destination: forced orders there provided the liquidity for large players to exit or enter. With the fuel spent, the push often ends.