Crypto Liquidations and Liquidation Heatmaps: How to Read Them

Leverage is everywhere in crypto. When price reaches the level where a leveraged position runs out of margin, the exchange closes it with a market order — and thousands of such forced orders can move price on their own.

What a liquidation is

A trader opening a 20× long uses 5% of the position as margin. A drop of roughly 5% (minus fees and maintenance margin) wipes that margin out, and the exchange's engine sells the position at market. Liquidations of shorts work the same way in the other direction: forced buying.

Why clusters matter

Traders pile into the same obvious places: above recent highs, below recent lows, at round numbers. Their liquidation prices therefore cluster too. When price approaches such a cluster, the first liquidations push it further, which triggers the next ones — a cascade. Large players know this, which is why price is often drawn towards dense liquidation zones before reversing.

Real liquidations vs. estimated maps

• Real liquidations are the forced orders exchanges actually executed. They are facts: where, when and how much.
• A liquidation heatmap is an estimate of where future liquidations sit, derived from open interest changes, typical leverage and where positions were opened. It is a model, not a ledger.
• Use the map to find where liquidity is likely to be, and real liquidations to confirm what actually happened.

Reading them together

• A spike of long liquidations at a low, followed by price recovering, often marks a local flush rather than a breakdown.
• A dense zone of estimated short liquidations just above price is fuel for a squeeze if buyers push into it.
• Liquidations on one exchange only can be a venue-specific event; the same picture on several exchanges is market-wide.

AggPro shows real liquidations from all major derivatives exchanges as bubbles on the chart, an estimated liquidation map on the side and Telegram alerts for large liquidations — all in one view with the aggregated order book.