TREE NEWS reports: Coinkarma founder Benson Sun said the practical value of liquidation heatmaps is overstated, arguing that their dense clusters are inferred from historical trade data and assumed leverage multiples rather than representing actual positions still awaiting liquidation. Position changes, margin top-ups and shifts in average cost all move liquidation zones, with error growing over time, he said. Sun added that heatmaps are best used as short-term market-structure context covering roughly the past 24 hours to three days, and should not carry too much weight in a trading system.
Coinkarma Founder Benson Sun Says Liquidation Heatmaps Are Overrated
AI take
This is a useful credibility check on a tool that has become a staple of crypto market commentary, and it lands hardest for traders who treat visible liquidation clusters as a map of where forced selling must occur. Sun's point is structural: those bands are reconstructions built on assumed leverage, so they decay as positions are adjusted or margined up, meaning the error compounds the further out one looks. The open question is whether the industry's reliance on such inferred data shifts toward shorter-horizon use, or whether heatmaps keep carrying weight they were never designed to bear.
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