How to Read the Liquidation Map and Predict Market Trends

Series Article: The Market Maker's Thinking Logic Issue 1

Brothers, the valuable content I promised is here
Today, we analyze how to use the Coinglass liquidation heatmap to identify retail traders' weaknesses and the most likely positions for market makers to target.

1. What exactly is the liquidation map?
- The liquidation heatmap (Liquidation Heatmap) shows price levels with dense leveraged positions
- When the price reaches these areas, retail traders get liquidated, and market makers harvest the margin
- It's like a minefield map on the battlefield — except the mines are money

2. Key signal interpretation
- The brighter the color, the larger the liquidation volume, indicating many retail traders are betting leverage there
- Yellow/orange dense area above the current price → Short positions are clustered, pushing the price up could trigger a short squeeze
- Yellow/orange dense area below the current price → Long positions are clustered, smashing through stop-losses could kill longs

3. Market makers' harvesting logic
They don’t profit from guessing the rise or fall, but from hunting liquidity:
- Dense short positions above? Pushing the price up to trigger liquidations is more profitable
- Long positions piled below? Breaking through stop-losses is more cost-effective
Prices always move toward areas with more liquidity

4. Three practical techniques
- Asymmetric signals: If liquidation volume is dense above and sparse below, a breakout upward is likely
- Power buildup phenomenon: During sideways trading, if liquidation volume on one side keeps increasing, it indicates an upcoming trend change
- Fake bait: Sometimes false clusters of liquidation appear (identify with volume and open interest)

5. Tool recommendations
→ Coinglass Liquidation Heatmap
Select trading pairs (like BTCUSDT) + timeframe, lock onto the battlefield with one click

Key point: Market makers don’t care whether Bitcoin goes up or down; they only track liquidity — and the liquidation map is their hunting guide

Want to learn how to distinguish between main players offloading and retail traps? Comment below, next issue coming soon!