A liquidation heatmap is a chart that estimates the price levels where leveraged long and short futures positions would be liquidated, and shows how those estimated zones change over time. Price runs along one axis, time along the other, and color marks how much modeled liquidation exposure sits at each level relative to the rest of the chart. It is an estimate built from market data and assumptions about leverage, not a record of real positions, and it does not say where price will go.
The three building blocks
Leverage
The CFTC glossary defines leverage as "the ability to control large dollar amounts of a commodity or security with a comparatively small amount of capital." In crypto perpetual futures, that capital is margin. A 2026 research paper on perpetual futures exchanges describes initial margin as the minimum collateral needed to open a position, typically 1 divided by the maximum leverage of the position's notional value. At 10x, that is 10% of notional; at 20x, 5%.
Liquidation
The same paper defines the liquidation price as "the price at which equity equals maintenance margin," where maintenance margin is the minimum collateral needed to keep a position open. Below that level, the exchange closes the position by selling longs or buying back shorts at prevailing market prices. Because maintenance margin is above zero, a position is liquidated before its initial margin is fully gone, so a 10x long is closed out by a move of somewhat less than 10%. The exact distance depends on each venue's maintenance margin rules, fees and funding.
Open interest
The CFTC defines open interest as the total number of futures contracts long or short in a market that have not yet been closed out or fulfilled. For a heatmap, open interest is the pool of positions that could, in principle, be liquidated.
How the chart is put together
Exchanges do not publish each trader's entry price, leverage and margin. A heatmap provider therefore models them. The general approach combines three steps:
- Take market data such as traded volume or open interest at different prices.
- Assume how that activity splits across common leverage levels.
- Apply the margin arithmetic above to project where those assumed positions would hit their liquidation prices, then add up the estimates at each price level.
CoinGlass, an analytics provider, says its heatmap calculates "liquidation risks across different price ranges using market trading volume, leverage usage" and related market data. The Kingfisher, which makes a heatmap called LiqMap, says its model's inputs, weightings and transformations are proprietary. Neither publishes a formula. Since the leverage split is an assumption, two providers can draw different zones for the same asset at the same moment.
The Kingfisher separates two related views. A liquidation map shows estimated levels at a single point in time. A liquidation heatmap adds the time axis, so a reader can see zones appear, strengthen, weaken or shift across a period.
How to read it
Start with the settings, then the colors.
- Instrument and scope. Confirm the contract, quote currency and whether the chart covers one venue or an aggregate.
- Time axis. Each column is an interval or update; its exact meaning depends on the product. Note the time zone and observation time.
- Price axis. Places each estimated zone against the instrument's price.
- Legend and scale. On CoinGlass, colors run from low-intensity purple to high-intensity bright yellow. The Kingfisher says color is relative model output under the active legend, so read the legend rather than assume a color means a direction.
A bright band means the model estimates more liquidation exposure at that price than at dimmer prices on the same chart. CoinGlass calls the levels "a relative intensity indicator." The Kingfisher says intensity should not be translated into a currency amount, a probability or an expected price move. Comparing two screenshots is only meaningful when instrument, scope, range, scale and product version match.
How much margin does your leverage leave?
Enter a leverage level to see the initial margin as a share of the position's notional value, using the 1-divided-by-leverage rule the article describes.
| Leverage on the position | Initial margin as a share of notional |
|---|---|
| 10 x | 10 % |
| 10 x | 10 % |
| 20 x | 5 % |
- Initial margin is taken as 1 divided by leverage of the position's notional value, which the cited perpetual futures paper calls the typical rule.
- Because maintenance margin is above zero, the position is liquidated before this whole margin is gone, so the price move that triggers liquidation is somewhat smaller than this percentage.
This shows only the margin needed to open a position: it does not calculate the liquidation price, which depends on each venue's maintenance margin rules, fees and funding, and it cannot show where a heatmap will draw its zones.
What a liquidation heatmap does not show
- Price direction. The Kingfisher says a bright band is not a support level, not a trade signal and does not identify a "next destination" for price.
- Actual liquidations. It is not a list of future liquidations. CoinGlass warns that "the actual liquidation amounts that occur may be lower than the levels shown on the heatmap."
- Real accounts. The Kingfisher says the chart is not an account-level ledger and cannot see every private position, margin balance or hedge.
- The order book. It does not show resting orders or executable liquidity. A chart of limit orders by price over time, often called a liquidity heatmap, is a different tool even though the name is similar.
- Cause and effect. Price crossing a band does not prove the band caused the move.
Why bright zones get attention, and the common misreading
Liquidations are executed as market orders. The perpetual futures paper notes that the exchange "executes a market order that consumes order book liquidity," that forced selling or buying can push other positions toward their own liquidation prices, and that "cascading liquidations can overwhelm available liquidity" in thin markets. That feedback loop is why dense liquidation zones draw attention.
The common misreading is to treat that mechanism as a forecast. Some provider materials describe price as tending to "gravitate" toward high-intensity zones; CoinGlass's learning page says this. That is the provider's claim, not a tested result. A heatmap describes modeled exposure if price reaches a level. It says nothing about whether price will get there.
Limits
The heatmap rests on undisclosed models and assumed leverage, so treat every zone as an estimate whose accuracy no provider has published.
