In 2024 alone, the cryptocurrency market saw significant turbulence, with Bitcoin solely experiencing liquidations surpassing $864 million in a single event. Also, the overall crypto market witnessed over $1.4 billion in liquidations, which was largely driven by Bitcoin’s crazy price fluctuations.
Unprofessional traders are getting liquidated every single day, just for not having the proper knowledge and tools for analyzing the market to get rid of liquidations.
This highlights the importance of tools like the Bitcoin Liquidation Heatmap, which helps traders visualize high-risk zones where liquidations are likely to occur.
Such tools like (Liquidation Heatmap) allow traders to sustain the volatile market more effectively, which will help them to predict potential liquidations and manage risks.
What is Bitcoin Liquidation Heatmap?
Bitcoin Liquidation Heatmap is a liquidation visualization tool that shows you where big Bitcoin and Tether trades might get liquidated.
Traders are liquidated when they cannot cover their margin with their broker as prices move in the direction that the position can no longer cover.
The heatmap simply visualizes liquidations, where more liquidations might happen or are happening.
The heatmap uses color to show you where most of the liquidations would happen. The “Deeper Color” means more liquidations. This tool helps the traders to quickly see where major liquidations are happening or might happen in a short while.
Also, it helps traders to easily see crucial price levels to stay above so as to ensure they do not get liquidated.
In general, this tool shows traders’ liquidation pressure across different exchanges and time frames. In addition, this helps the traders to see where sentiment might be driving the market and pressure.
Understanding Liquidation
Liquidation is what happens in trading when a trader who borrowed money using leverage cannot cover their losses.
Leverage allows traders to borrow more money to invest in an asset, and that asset should increase in value so that the trader can use the profit to pay back the loan and keep the difference.
However, if the asset falls, the trader may not have enough funds to keep their position open. Forced liquidation usually occurs when an asset has lost too much value for the trader to pay back the broker.
In this situation, the broker will automatically sell all of the trader’s assets to cover the losses. This process is called liquidation. Liquidation can lead to quick price drop-offs, meaning faster trading volatility.
Meanwhile, even non-traders can benefit from liquidation as a healthy time to buy an asset for a brief price cut. Moreover, a liquidation can quickly and easily result in a trader going totally ‘bankrupt’ or ‘rekt’ if they take too much leverage without properly analyzing market sentiment.
How Does Bitcoin Liquidation Heatmap Work?
A Bitcoin Liquidation Heatmap works by visually displaying areas where large positions in Bitcoin (BTC) are likely to be liquidated. Here’s how it functions:
- Exchangers’ Data Collection: The heatmap gathers data from exchanges about traders’ positions, particularly leveraged ones (where traders borrow funds to increase their positions).
- Mapping Liquidation Zones: It then identifies price levels where significant liquidations may occur.
- Using Color to Identify Top Liquidations Area: The heatmap uses colors like (Yellow/Green/Red) to represent the density of liquidation orders. The deeper color highlights areas with higher liquidation potential, while lighter color areas show less liquidation activity.
Where to Find Bitcoin Liquidation Heatmap?
There are a few crypto service providers currently offering the service of finding Bitcoin liquidity heatmaps from major exchanges. Some of them are:
**CoinGlass** [Editor’s Choice]
GlassNode
CryptoQuant
TensorCharts
Coinalyze
Bitcoin Liquidation Heatmap Pricing? Is this Free of Cost?
According to CoinGlass, the Bitcoin Liquidity Heatmap for the BTC/USDT trading pair is available free of cost. However, access to other trading pairs or advanced features may require a subscription or paid plan.
For traders looking to monitor the BTC/USDT pair specifically, CoinGlass offers this data without charge.
This is a price chart of some other Liquidation Heatmap service providers:-
Service Provider | Monthly Package | Yearly Package | Package |
Coin Glass | $95 usd | $948 usd | Startup |
Glass Node | $39 usd | $348 usd | Advanced |
Crypto Quant | $39 usd | $348 usd | Advanced |
Tensor Charts | $18 usd | $216 usd | Premium |
Coinalyze | $10.95 usd | $131.40 usd | Ad-Free Version |
Pricing Chart of Bitcoin Liquidation Heatmap Providers
How to analyze Bitcoin Liquidation Heatmap?
Many of the traders don’t know how to use Bitcoin Liquidation Heatmap properly. Let’s find out the key things about how to properly analyze Bitcoin liquidations Heatmap:
**Spot High-Density Areas**
Look for darker areas on the heatmap that show where many liquidations are happening. These zones indicate strong market activity, helping traders see where heavy buying or selling might occur.
**Identify Support and Resistance**
High liquidation zones often match support (price doesn’t drop lower) or resistance (price doesn’t go higher) levels. These can guide your decisions on when to enter or exit trades.
**Understand Market Psychology**
The heatmap also shows the mood of the market. For example, lots of liquidations at lower prices suggest many traders are betting on the price falling. If these positions close, the price might rise.
These are the key things a trader should follow to properly use the Bitcoin Liquidation Heatmap and avoid being liquidated.
Benefits of Using Crypto Liquidation Heatmap
To be a successful futures trader, the Liquidity Heatmap works like magic. This is because you can make more informed decisions in your trades by analyzing the Liquidity Heatmap. Here are some major benefits of using a Crypto Liquidation Heatmap:
You can objectify the current liquidations of both long & short.
You can calculate your future trade.
You can be aware of market volatility.
You can get rid of being totally *rekt*.
You can make a decision on your next move.
These are the key benefits of using/analyzing crypto liquidation heatmap. Besides these factors, there are also many potential advantages of the crypto liquidation heatmap, which could drive a trader to the next level.
Overall Judgment
Hence the heatmap is a very valuable resource for futures traders, helping them to identify and understand market tendencies and, as a result, points of enhanced risk or lucrative opportunities, especially in periods of high volatility.
At the same time, no tool should be abused in isolation from supportive or complimentary tools or resources.
In other words, a heatmap is a most efficient tool or strategy when used within the framework of other tools and strategies that help weave a good decision-making skill.
To sum up, the BTC Liquidation heatmap is a very effective tool or strategy meant for short-distance trading and seeking to take advantage of liquidity trends.
However, like any tool, it should not be relied upon in isolation. It works best when used alongside other market analysis tools and strategies to improve decision-making. While the heatmap can provide key insights into the market, it does not guarantee profits, as market conditions are influenced by a multitude of factors.
In summary, the Bitcoin Liquidation Heatmap is highly effective for short-term traders looking to capitalize on liquidity imbalances but should be approached with caution and used within a broader trading strategy.