A heatmap is usually an estimate#
Public liquidation maps commonly infer zones from price, leverage assumptions and available derivatives data. The model may not know each trader's entry price, collateral, cross- or isolated-margin setting, hedge, added margin or later position change. A bright area is therefore not necessarily a visible resting order, a confirmed liquidation level or a complete record of positions.
Venue and contract coverage matters#
Perpetuals, dated futures, inverse and linear contracts, collateral rules and maintenance margins differ. Index prices, mark prices, fees and liquidation engines can differ too. A map that covers one set of venues can disagree with another without either representing the whole market, and aggregating unlike contracts can hide those distinctions.
Leverage can create feedback, not certainty#
Fast price moves can trigger liquidations and further volatility; CFTC guidance also notes that leverage amplifies underlying crypto risk. But participants can reduce, add, close or hedge exposure while the map is being viewed. Estimated clusters can shrink, move or disappear, and there is no requirement that price visit the largest colored zone.
Sources and references#
Use these direct research and official references to verify definitions, scope and limitations.
- Customer Advisory: Understand the Risks of Virtual Currency Trading — U.S. Commodity Futures Trading Commission
- Crypto Assets - Risks — Financial Industry Regulatory Authority (FINRA)
Key principles#
Model assumptions
Check whether the map explains leverage, entry-price, margin, contract and aggregation assumptions rather than presenting colors without a method.
Timestamp and coverage
Record the snapshot time and covered venues. Old estimates and partial coverage can become misleading during fast markets.
No target levels
MarketPulse does not convert liquidation zones into entries, exits, targets, leverage suggestions or claims that price is drawn to a cluster.