Guides › Bitcoin liquidation map: what it is and how to read it
Bitcoin liquidation map: what it is and how to read it
When someone opens a leveraged position in Bitcoin futures, there is a price at which the exchange will close it by force because the margin no longer covers the losses: its liquidation price. A liquidation map groups those prices and shows the levels where the most positions are waiting to be liquidated.
Why liquidations matter
A liquidation is a forced market order: a liquidated long sells and a liquidated short buys. When price reaches a zone with many liquidations stacked together, those chained orders can accelerate the move. That is why price often seems to "hunt" the levels with the most liquidity before turning, something traders call a sweep or stop hunt.
How to read the RadarFlow map
- Orange bars, below price: liquidations of long positions.
- Blue bars, above price: liquidations of short positions.
- Major clusters: the zones with the largest estimated volume. If price reaches them, chain liquidations can cause sharp moves.
- Nearby liquidations: how much sits above and below price. Note: in our 2-year backtest, having more on one side did not predict where price goes next. Use it to see where volatility can appear, not the direction.
- Sweep: when price runs through a large cluster and then recovers, the panel flags it as a long or short sweep. This one did test well: after a large long liquidation sweep, price tended to bounce (see the tested signals).
How it is calculated (and its limits)
Exchanges do not publish individual positions, so every liquidation map is an estimate. RadarFlow starts from Binance Futures open interest: whenever open interest rises in a candle, it assumes new positions were opened at that price, splits them between longs and shorts according to the aggressive buying and selling in that candle, and computes their liquidation prices for several leverage levels (5x to 100x). When price touches a level, those liquidations are considered executed and removed from the map. It is an approximate model: price often overshoots the exact level a little, and a zone with a lot of liquidity does not guarantee that price will reach it.