What is a Liquidation Heatmap?

A liquidation heatmap is a visual overlay on a price chart that shows where leveraged trading positions will be forcibly closed (liquidated) by exchanges. Each price level is colour-coded: black and dark purple indicate low liquidation exposure, while orange, yellow, and white indicate massive concentrations of positions that will liquidate if price reaches those levels.

premium derivatives platforms popularised this tool and charges $49–$699/month for access. CryptoPulse24 provides it completely free.

Why Liquidation Heatmaps Matter

When leveraged traders open positions, they deposit collateral to borrow more capital than they have. If price moves against them by a certain percentage, the exchange automatically closes (liquidates) their position to recover the borrowed capital. This creates predictable price magnets.

Market makers and institutional traders know where these liquidation clusters are. They deliberately push price into these zones to trigger a cascade of liquidations, capturing the sudden liquidity surge. This is why you often see Bitcoin spike suddenly to a specific level, then retrace — the liquidation zone was the target.

How to Read the Heatmap: Step by Step

Step 1: Open the Heatmap

Go to cryptopulse24.com/heatmap. Select your asset (BTC, ETH, SOL, etc.), exchange, and timeframe. The 1H timeframe is best for intraday trading; 4H and 1D are better for swing trading.

Step 2: Identify the Colour Scale

The colour spectrum runs from black (no liquidations) through dark purple, deep red, orange, yellow, to white (extreme liquidation concentration). Focus on yellow and white zones — these represent the highest density of liquidatable capital.

Step 3: Locate Major Clusters

Look for bright zones above and below the current price:

Bright zones ABOVE price = Short seller liquidation clusters. Price is likely to rally toward these zones as longs squeeze out shorts.
Bright zones BELOW price = Long buyer liquidation clusters. Price may dip to these zones as shorts squeeze out longs.

Step 4: Identify the Nearest Target

The nearest bright zone to the current price is usually the most immediate price target. In a ranging market, price will often ping-pong between the upper and lower clusters as each side gets liquidated in turn.

Step 5: Look for the Dominant Cluster

The largest, brightest cluster on the chart often represents the primary directional target for the current trading session. Institutional traders are positioned to push price toward the largest liquidity pool.

Practical Trading Strategies Using Liquidation Heatmaps

Strategy 1: Fade the Liquidation Hunt

When price rapidly spikes toward a bright yellow zone, enters it, and then begins to reverse — this is a liquidation hunt completing. Enter a position in the opposite direction after the initial liquidation spike, targeting the next cluster on the other side.

Strategy 2: Stop Loss Placement

Place your stop loss just beyond the nearest liquidation cluster. If you're long, place your stop below a major long liquidation cluster — this is where the natural stop hunt will terminate, and price is likely to reverse from there.

Strategy 3: Take Profit Targets

Set your take profit at the next major liquidation cluster in your direction. In a bullish trend, target the nearest bright zone above price. In a bearish trend, target the nearest bright zone below price.

Common Mistakes When Using Liquidation Heatmaps

Mistake 1: Treating the heatmap as a certainty. Heatmaps show probability, not certainty. Price may not reach every cluster it appears to be targeting.

Mistake 2: Ignoring the broader trend. Always use the heatmap in the context of the overall trend. In a strong bull market, upside liquidation clusters are far more relevant than downside ones.

Mistake 3: Using too short a timeframe. Intraday noise can make the 5m heatmap misleading. Start with 1H or 4H for better signal quality.

CryptoPulse24 vs premium derivatives platforms Heatmap

premium derivatives platforms charges $49/month (Basic) to $699/month (Enterprise) for heatmap access. CryptoPulse24 provides the same heatmap completely free, with no account required. Compare CryptoPulse24 vs premium derivatives platforms →