Bitcoin Improvement Proposal 110 (BIP-110) has become one of the most discussed proposals in the Bitcoin ecosystem in 2026. The proposal aims to limit the amount of arbitrary data that can be embedded in Bitcoin transactions, primarily targeting inscription-based protocols such as Ordinals, BRC-20, and Runes. Supporters believe the proposal will help reduce blockchain bloat, lower node operating costs, and preserve Bitcoin’s role as a peer-to-peer payment network. Critics, however, argue that it could restrict legitimate use cases, impact Layer-2 development, and introduce protocol-level censorship.
With the miner signaling window approaching, the discussion around BIP-110 has expanded beyond technical implementation to broader questions about Bitcoin’s governance, decentralization, and future development. This article examines why the proposal was introduced, the changes it proposes, the arguments from both sides, and what the outcome could mean for the Bitcoin network.
What Is BIP-110?
BIP-110 is a proposed temporary soft fork that introduces stricter limits on how arbitrary data can be stored within Bitcoin transactions. The proposal was first introduced in October 2025 under the placeholder draft name BIP-444 by pseudonymous Bitcoin developer Dathon Ohm.
Its primary objective is to reduce non-financial data stored on the Bitcoin blockchain by restricting the transaction structures commonly used by Ordinals, BRC-20 tokens, and Runes. The proposal also aims to reduce blockchain growth, lower node hardware requirements, and improve accessibility for individuals running full Bitcoin nodes.
Although the proposal’s technical specification has been marked as complete, it still requires ecosystem support before any activation can occur.
Why Was BIP-110 Proposed?
The proposal was introduced in response to the rapid growth of inscription-based protocols that use Bitcoin block space to store images, tokens, and other forms of arbitrary data. Supporters argue that these applications have significantly increased blockchain storage requirements while driving higher transaction fees for standard Bitcoin users.
According to the proposal, four major issues have emerged:
Proponents also argue that recent policy changes in Bitcoin Core made it easier for data-heavy transactions to enter the network, accelerating blockchain growth and increasing pressure on node operators.
What Changes Would BIP-110 Introduce?
Rather than banning inscription protocols directly, BIP-110 modifies transaction validation rules to make storing large amounts of arbitrary data significantly more difficult.
These restrictions would significantly impact protocols that rely on embedding large amounts of data on-chain.
Potential Impact Across the Ecosystem
Why Has the Proposal Become So Controversial?
BIP-110 has divided the Bitcoin community over a fundamental question: Should Bitcoin prioritize its role as a monetary network, or remain completely permissionless regardless of how block space is used?
Supporters argue that inscription-based protocols are consuming valuable block space, increasing node costs, and making it more expensive for users to participate in the network.
Luke Dashjr, one of Bitcoin’s long-time developers and a supporter of the proposal, has described BIP-110 as “a temporary measure designed to keep validation accessible and protect node operators from unnecessary storage costs.”
Jason Hughes, Vice President of Development and Engineering at OCEAN, echoed a similar view, saying:
“We need to maintain the purity of the blockchain’s base layer to keep it decentralized. BIP-110 restores historical policy caps that should never have been bypassed.”
Independent Bitcoin researcher Robert Allen also believes action is necessary, stating:
“BIP-110 is imperfect, but it is highly preferable to leaving the issue of blockchain spam completely unaddressed.”
Veteran Bitcoin investor Fred Krueger took a broader perspective on the debate, saying:
“Eventually we will figure out some way to deal with spam, quantum, and other issues… Bitcoin will make it through.”
Despite these arguments, opposition to BIP-110 remains significant.
Adam Back, CEO of Blockstream, dismissed the proposal as an unnecessary attempt to regulate how users interact with the network, describing it as a “quest to police other people,” which he believes conflicts with Bitcoin’s permissionless design.
Bitcoin security expert Jameson Lopp has also criticized the proposal, arguing that its architectural priorities are misplaced and warning against introducing consensus changes that could affect broader ecosystem development.
Developer Peter Todd questioned the proposal’s effectiveness, arguing that determined users could bypass many of the proposed restrictions, limiting its practical impact.
Community criticism extends beyond developers. Crypto analyst Javier Hermosa compared the proposal’s supporters to overly restrictive policy advocates, while Ki Young Ju, CEO of CryptoQuant, remarked:
“BIP-110 is like amending the constitution to ban littering in the park.”
Similarly, Samson Mow questioned the proposal’s chances of success, stating:
“It doesn’t have consensus… especially amongst technical development experts… and there are a lot of ordinary people using Bitcoin that don’t agree with it either.”
Supporters vs Critics
What Happens Next?
The next stage for BIP-110 is the miner signaling period scheduled to begin in August 2026. According to the available proposal details, miner support currently remains extremely limited, with signaling reported at approximately 0.31%.
If sufficient support is not achieved during the activation window, the proposal is unlikely to move forward in its current form. However, the broader discussion around inscription protocols, node costs, and Bitcoin’s long-term scalability is expected to continue regardless of BIP-110’s outcome.
Conclusion
BIP-110 has evolved beyond a technical proposal into a broader discussion about Bitcoin’s future. While supporters view it as a way to reduce blockchain bloat and improve node accessibility, critics believe it could limit innovation and alter Bitcoin’s permissionless nature. Regardless of its outcome, the proposal is likely to influence future discussions on Bitcoin governance and protocol development.
Crypto markets enter a high-impact week as traders monitor inflation reports, Fed policy signals, corporate earnings, and the CLARITY Act hearing for potential market catalysts.
The cryptocurrency market is entering a busy week as investors prepare for several major U.S. economic events, corporate earnings reports, and regulatory developments that could impact risk sentiment across financial markets.
Bitcoin and other cryptocurrencies continue to react closely to macroeconomic signals, especially inflation trends, Federal Reserve rate expectations, and global market uncertainty. This week’s schedule includes important economic indicators along with a major crypto regulation hearing that traders will be watching closely.
Markets React to Strait of Hormuz Closure
Markets begin the week with investors assessing the impact of developments surrounding the Strait of Hormuz closure.
The region plays a major role in global energy markets, and any disruption could affect oil prices, inflation expectations, and overall investor sentiment.
Higher energy costs could create additional inflation concerns and influence expectations around Federal Reserve monetary policy. Since crypto markets often move alongside broader risk assets, increased uncertainty could lead to higher volatility in Bitcoin and altcoins.
June CPI Inflation Data — Tuesday, July 14
One of the most important economic events arrives on Tuesday, July 14, with the release of June Consumer Price Index (CPI) inflation data.
The CPI report will provide fresh insight into whether inflation continues to cool or remains elevated. A lower-than-expected inflation reading could increase expectations for future Federal Reserve rate cuts, potentially supporting risk assets like Bitcoin and Ethereum.
However, stronger inflation numbers may reduce hopes for monetary easing and create short-term pressure across financial markets, including cryptocurrencies.
June PPI Inflation Data — Wednesday, July 15
On Wednesday, July 15, investors will focus on June Producer Price Index (PPI) inflation data.
The PPI report tracks changes in prices received by producers and offers another view of inflation trends. Rising producer prices could signal ongoing inflation pressure, while weaker data may improve confidence that inflation is moving toward the Federal Reserve’s target.
Crypto traders will monitor the report as inflation trends continue to influence liquidity conditions and investor risk appetite.
June Retail Sales Data — Thursday, July 16
Thursday, July 16, will bring June Retail Sales data, providing insight into U.S. consumer spending strength.
Consumer activity remains a key indicator of economic health. Strong retail sales could show resilience in the economy but may also reduce expectations for immediate rate cuts.
Meanwhile, weaker consumer spending data could raise concerns about economic slowdown while increasing expectations for a more accommodative monetary policy environment, which may benefit risk assets.
July Philly Fed Manufacturing Index — Thursday, July 16
Also on Thursday, July 16, markets will receive the July Philadelphia Fed Manufacturing Index.
The report will provide a snapshot of manufacturing activity and business conditions in the U.S.
A stronger manufacturing reading could support confidence in economic growth, while weaker numbers may increase concerns about slowing economic momentum.
July Michigan Inflation Expectations — Friday, July 17
On Friday, July 17, investors will watch July Michigan Inflation Expectations data.
Inflation expectations are closely monitored by the Federal Reserve because rising expectations can influence future price trends and monetary policy decisions.
A rise in inflation expectations could create pressure on markets, while stable or declining expectations may support investor confidence.
July Michigan Consumer Sentiment Data — Friday, July 17
Also scheduled for Friday, July 17, is the July Michigan Consumer Sentiment report.
The data will provide insight into consumer confidence and how households view current and future economic conditions.
Improving sentiment could support broader market optimism, while declining confidence may increase concerns about economic weakness.
Around 10% of S&P 500 Companies Report Earnings
Alongside economic releases, approximately 10% of S&P 500 companies are expected to report earnings this week.
Corporate earnings results could influence overall market direction and investor confidence. Strong earnings may support risk assets, while weaker-than-expected results could increase market volatility.
Since Bitcoin and crypto assets have shown stronger connections with traditional markets in recent years, equity market movements could also impact digital asset sentiment.
CLARITY Act Hearing — July 17
The final major event arrives on July 17, when the House Financial Services Committee will hold a key hearing in New York focused on the CLARITY Act.
Lawmakers are expected to discuss an updated version of the legislation, which combines proposals from multiple Senate committees. However, several important provisions remain under negotiation, creating uncertainty around the timeline for a potential Senate floor vote.
The outcome of the hearing could influence expectations around U.S. crypto regulation. Progress toward clearer rules may improve institutional confidence in digital assets, while delays could extend uncertainty for the industry.
What Crypto Investors Should Watch
This week brings multiple market-moving factors, from inflation reports and economic data to corporate earnings and crypto regulation discussions.
For Bitcoin and the broader cryptocurrency market, the combination of inflation trends, Federal Reserve expectations, and regulatory developments will likely determine short-term market sentiment.
Traders will be closely watching whether economic data supports a more favorable environment for risk assets or creates additional pressure across crypto markets.
H1 2026 was one of the toughest six-month periods for crypto in recent memory. The total crypto market cap fell from $3.32 trillion in January to $2.28 trillion by June, while Bitcoin dropped 31.5% and Ethereum lost roughly 32%–40%. Yet even in this broad market decline, a few crypto categories still generated outsized gains and created the strongest wealth-building opportunities.
The key question is not which sector had the biggest market cap, but which category delivered the highest concentration of high-return opportunities. Based on the data, Real World Assets (RWA) emerged as the strongest overall category in H1 2026, while AI tokens and select meme coins produced the most explosive individual token returns.
H1 2026 crypto market overview
The first half of 2026 was defined by a sharp contraction across the crypto market. Bitcoin dominance climbed from 57%–58% in January to 63% by June, showing that capital rotated away from many altcoins and back into Bitcoin during the downturn.
Which crypto category performed best?
RWA was the clear category winner because it combined positive market-cap growth, the largest capital inflows, and strong institutional demand. AI and meme coins still produced massive individual token gains, but as categories they did not outperform RWA overall.
Why RWA stood out in H1 2026
RWA benefited from a different type of demand than most crypto narratives. While meme coins and AI tokens relied heavily on retail speculation, RWA attracted institutional capital through tokenized treasuries, equities, and real-world yield products.
The sector saw +$9.4 billion in capital inflows, +66% TVL growth, and trading volume growth of +115%. Its market size expanded from roughly $52 billion to $60–63.6 billion, making it one of the few crypto categories to grow during a broader market downturn.
This matters for the millionaire-making narrative because RWA created wealth through sustained capital appreciation and institutional adoption, not just short-lived speculation. Investors who positioned early in RWA-related projects benefited from both rising valuations and a growing narrative around tokenized real-world assets.
AI tokens still created explosive gains
AI tokens were one of the most exciting narratives of H1 2026, even though the category’s overall market cap declined from $29.5 billion to $25 billion. The sector attracted $340 million in capital inflows and saw +45% trading-volume growth, driven by AI-agent perpetuals and meme-style speculation around AI projects.
The reason AI still matters in this article is simple: individual AI-related tokens delivered some of the highest returns in the market. Even if the category as a whole was down, select AI tokens created outsized wealth for early investors.
Top-performing tokens in H1 2026
MUMU was the standout performer, surging +123,407.72% from January to June. That type of return is exactly why meme coins remain part of the millionaire-making conversation, even when the broader meme category was down overall.
Meme coins: high risk, high reward
Meme coins had a mixed H1 2026. The category’s market cap fell from roughly $47 billion to $24.48–30.6 billion, and capital inflows turned negative as money rotated back into blue-chip assets. Trading volume also dropped 22% after the hype peak of 2024 and 2025.
However, meme coins still produced the single largest individual token gain through MUMU. This shows the difference between category performance and individual token performance. The meme sector was weak overall, but a few speculative tokens created life-changing returns for early holders.
Capital flows reveal where smart money went
Capital flow data confirms that RWA attracted the strongest conviction from investors. Layer-1 and Layer-2 ecosystems also received positive inflows, but they did not match the scale of RWA’s institutional demand.
By contrast, DeFi suffered the largest outflow at -$45 billion, with TVL dropping 39.1% from $115 billion to $70 billion. Gaming also struggled, with -$180 million in outflows and a 50.77% decline in market cap.
Did these categories really create the most millionaires?
No public dataset can verify the exact number of millionaires created by each crypto category. But the available data strongly suggests that RWA created the most sustainable wealth opportunities, while AI and meme coins created the most explosive short-term gains.
RWA stands out because it combined positive category growth, the largest capital inflows, and institutional adoption. AI tokens stand out because they produced several triple-digit returns, even in a declining category. Meme coins stand out because they produced the single most extreme gain through MUMU.
Final verdict
RWA was the strongest crypto category in H1 2026 when measured by category growth, capital inflows, and institutional demand. It offered the clearest path to sustainable wealth creation during a difficult market period.
However, if the question is about which category produced the most explosive millionaire-making returns, then AI tokens and meme coins deserve the spotlight. AI delivered strong speculative momentum, while meme coins produced the extraordinary MUMU rally.
The safest conclusion is this: RWA won on overall category strength, while AI and meme coins produced the highest-risk, highest-reward opportunities in H1 2026.
Three years ago, before I got sober, I parked a stop-loss right inside the densest liquidation cluster on the board. I watched the wick stab down, vaporize my stop, and reverse to my original target without me. I had front-run my own funeral.
That trade cost me more than money. It was one of the last dominoes before I blew up the account for good. But it also taught me the single most useful thing I know about derivatives: the crowd’s pain points are printed on the chart, in advance, if you know where to look.
That is what this guide is about. I am going to show you how to trade liquidation clusters on Hyperliquid using real, repeatable setups across BTC, ETH, and SOL. Not theory. Not “liquidations are when leverage goes bad.” Actual entries, stops, and targets, plus the mistakes that nearly ended my trading career.
Quick answer: A liquidation cluster is a price level where a large number of leveraged positions get force-closed at the same time. On Hyperliquid you can see these clusters forming on a liquidation heatmap before they trigger. You trade them by fading the sweep into a dense cluster, riding the cascade through thin zones, and never resting a stop inside one.
Let me build it from the ground up. Skip ahead if you already know the mechanics.
What a liquidation cluster is on the Hyperliquid heatmap
A liquidation happens when a leveraged position can no longer cover its losses. The exchange force-closes it to protect the system. The price where that happens is the position’s liquidation price.
Now stack thousands of traders together. A lot of them open positions near the same support, at the same round numbers, at similar leverage. Their liquidation prices bunch up. That bunch is a liquidation cluster, and on a Hyperliquid liquidation heatmap it shows up as a bright band at a predictable price.
Hyperliquid is a clean place to study this for one reason: it is on-chain. The positions are real and visible, not a centralized exchange’s best guess. The protocol liquidates against the mark price (a smoothed oracle price), not the last trade, so wicks on a single venue cannot nuke you the way they can elsewhere. Once your margin falls below the maintenance margin requirement, you are gone, and a backstop liquidator (often the HLP vault) takes the position.
Leverage caps shape where clusters form. BTC allows up to 40x. SOL sits lower, usually in the 20x to 25x range. Higher caps mean traders pile in tighter to the current price, so BTC clusters often sit closer to spot than SOL clusters do. Hold that thought, because it matters when we compare assets.
The live BTC liquidation heatmap on HyperPerps. Teal bars above spot are short-liquidation clusters (upside fuel). Red bars below are long-liquidation clusters (downside fuel). Wider and brighter equals more leveraged size waiting at that price.
A liquidation heatmap is just a map of where those clusters sit. Price runs up the side. Time runs across. The bright bands are where the leverage is stacked.
Here is the mental model I use:
Brightness equals size. A bright, thick band is a fat cluster (lots of size, lots of forced orders waiting). A faint band is thin.
Color equals side. Most tools color long liquidations and short liquidations differently. Longs get liquidated below price. Shorts get liquidated above it.
Clusters act like magnets. Price drifts toward dense liquidity because that is where the resting orders and forced fills live. Market makers know it too.
(If you are following along, pull up the live BTC, ETH, and SOL heatmap I link near the bottom and keep it open. Reading this with a static screenshot is like learning to swim from a textbook.)
The skill is not spotting the brightest band. Everyone sees that. The skill is reading which clusters are fresh and unfilled versus already swept. A cluster that price has already pierced is spent. A cluster sitting just out of reach, glowing, untouched, is a loaded spring.
Why clusters move price: the cascade
A single liquidation is a market order the trader did not choose to send. When a long gets liquidated, the system sells. That selling pushes price down. Lower price triggers the next liquidation cluster. More forced selling. Lower price. You see where this goes.
That feedback loop is a liquidation cascade, and it is why clusters are not just lines on a chart. They are fuel.
Hyperliquid adds its own wrinkle. Liquidations get processed in chunks rather than all at once, with the backstop vault absorbing size in steps. That can make a cascade look stair-stepped instead of a single vertical candle. For us, that stair-stepping is a gift, because it gives you time to react instead of waking up already stopped out.
Cascades feel violent and random in the moment. They are not. They are a chain reaction with a visible fuse. The heatmap is the fuse.
Price with the liquidation overlay on. You can watch candles get pulled toward the dense clusters in real time, then accelerate through the thin zones between them.
BTC vs ETH vs SOL: how their clusters behave differently
This is the part almost nobody writes about, and it is where the edge lives. The three majors do not behave the same, and trading them like they do is how you get chopped up.
Here is what I have found after staring at these books longer than is healthy.
BTC clusters are deep and slow. Bitcoin has the most open interest and the deepest liquidity on Hyperliquid. Its clusters act like strong magnets, but price tends to grind into them rather than rocket. A BTC cluster sweep often gives you time to position. Fades work well here because reversals off BTC clusters are usually orderly. The risk is that a truly big cluster can absorb a lot before it breaks.
SOL clusters are shallow and violent. Solana runs lower max leverage but far higher relative volatility and thinner liquidity. When a SOL cluster goes, it goes. Cascades resolve fast and overshoot. The fade still works, but your stop has to respect that SOL can spike three percent past a cluster before snapping back. Size down. SOL is where I have been right on direction and still liquidated on timing.
ETH sits in the middle. Ethereum behaves like a calmer Solana or a twitchier Bitcoin, depending on the week. Its clusters are meaningful, its cascades have real follow-through, but it rarely overshoots as savagely as SOL. ETH is the asset I send to people learning this, because the signals are clear enough to read and forgiving enough to survive.
The practical takeaway: the same setup needs different stops and different size on each asset. A stop that is sane on BTC is suicide on SOL.
Three ways to actually trade liquidation clusters
Enough background. Here are the three setups I actually use. Each one has an entry, a stop, and a target, because a setup without all three is just a vibe.
The cluster-sweep fade
This is the bread and butter. Price runs into a dense cluster, triggers the forced orders, overshoots, and snaps back. You are fading the overshoot.
Entry: Wait for price to wick into the cluster and show rejection (a long lower wick on a down-sweep, a long upper wick on an up-sweep). Do not enter as price is approaching. Enter on the reaction.
Stop: Just beyond the far edge of the cluster, where the thesis is dead. If price closes through the whole cluster, the magnet became a trapdoor. You are wrong. Get out.
Target: The next resting cluster or obvious liquidity in the opposite direction. Clusters point at clusters.
The fade works because most of the forced selling (or buying) is exhausted right after the sweep. The crowd that was going to get liquidated already did. Supply dries up. Price reverts.
The cascade chase
The mirror image. Instead of fading the cluster, you ride the chain reaction between clusters.
Entry: When price breaks cleanly through a cluster on rising volume and there is a thin zone above or below before the next dense band, you go with the move. Empty space on the heatmap means little resistance.
Stop: Back inside the cluster you just broke, because if price reclaims it, the breakout failed.
Target: The next dense cluster. That is where the cascade refuels and stalls. Take profit into it, do not wait for it to break too.
This is higher risk and higher reward. You are trading momentum, not reversion. I keep size smaller here and I am quick to take the meat of the move.
Stop placement: never park inside a cluster
This one is not a setup. It is a rule written in my own blood (and margin).
Whatever you trade, your stop cannot live inside a liquidation cluster. That is the first place price gets dragged. Put your stop where my younger self put his, in the brightest band on the board, and you are volunteering to be the liquidity that fills everyone else’s fade.
Place stops beyond clusters, not inside them. Give the magnet room to do its work and then invalidate you cleanly on the other side.
Funding rate plus cluster confluence
A cluster tells you where. Funding tells you who.
When funding rates are heavily positive, longs are paying shorts, which means the book is crowded long, which means the painful move is down, into the long liquidation clusters below. Heavily negative funding flips it: crowded shorts, and the squeeze runs up into the short clusters above.
Stack the two signals. A fat long-liquidation cluster sitting below price plus stretched positive funding is the highest-conviction fade-the-bounce-or-ride-the-flush setup on the board. The crowd is offside and the fuel is loaded under them.
I also glance at open interest. Rising OI into a cluster means new leveraged money is feeding the fire. Falling OI means positions are already closing and the cluster may fizzle. Cluster plus funding plus OI is the three-legged stool. Two legs is a coin flip. Three is an edge.
Position sizing against cluster density
People ask me how much to size around clusters. Here is the rule of thumb I actually use.
The closer and denser the nearest opposing cluster, the smaller your size, because the odds of a violent sweep through your level go up. The farther and thinner the nearest cluster, the more room you have and the more size you can justify.
Practically: if I am long and there is a giant long-liquidation cluster two percent below me, I am trading half size, because that magnet is hungry. If the nearest meaningful cluster is six percent away through thin air, I will carry more. Size is not a fixed number. It is a function of how close the next landmine sits.
And on SOL specifically, cut whatever number you landed on. I mean it.
Retail clusters vs smart-money clusters
Not all clusters are equal. Some are dumb money you can hunt. Some are smart money you should respect.
A retail cluster forms from over-leveraged late entries: a vertical pump, everyone piling in at 20x near the top, a wall of liquidation prices stacked just under the move. These get swept. That is the high-probability fade.
A smart-money cluster is built more deliberately, often lower leverage, often defended. When a cluster keeps getting tested and refuses to break, that is positioning with conviction behind it, not tourists. Fading that is how you get run over.
How do I tell them apart? Cohort positioning and context. Retail clusters appear fast, near local extremes, after emotional moves. Smart clusters build slowly, at structure, and absorb pressure without flushing. When in doubt, watch how the cluster reacts to its first test. The crowd panics. Conviction does not.
Common mistakes I see (and made)
I have made every one of these, so I am not lecturing from a pedestal. I am pointing at the rake I already stepped on.
Chasing every cluster. Most clusters are noise. Trade the fat, fresh, confluent ones. Skip the rest.
Stops inside clusters. Covered above. It is the cardinal sin. Do not.
Ignoring funding. A cluster without the funding context is half a signal. You are guessing which side breaks.
Same size on every asset. SOL is not BTC. Sizing them identically is how you survive ten trades and die on the eleventh.
Treating the heatmap as a crystal ball. It is a probability map, not a prophecy. Clusters get defended, cascades fail, and sometimes the magnet just does not pull. Risk-manage like you might be wrong, because regularly you will be.
See it live: the BTC, ETH & SOL heatmap
Everything above is useless on a stale screenshot. Clusters move. You need to watch them load in real time.
I keep the Hyperliquid liquidation heatmap on HyperPerps open while I trade. It polls all of Hyperliquid’s perps and surfaces the large BTC, ETH, and SOL clusters as they build, which is exactly the on-chain, first-party data this whole strategy depends on. Pull it up, find the fattest fresh cluster on BTC right now, and check the funding. That is your first rep.
Trade it on Hyperliquid
If you want to actually run these setups, you need an account on the venue itself. Hyperliquid is the on-chain perps exchange this entire playbook is built around, and it is where the cluster data is real instead of estimated.
You can sign up and trade through our code here: app.hyperliquid.xyz/join/HYPERPERPSBOT. Using the HYPERPERPSBOT referral gets you a fee discount, which matters more than people think when you are trading these setups actively. Fees are the silent tax on every fade.
Frequently asked questions
What is a liquidation cluster on Hyperliquid?
It is a price level where many leveraged positions share the same liquidation price, so they get force-closed together if price reaches it. On Hyperliquid these are visible on-chain, which is why the heatmap data is more trustworthy than a centralized exchange’s estimate.
How should I size my position around nearby liquidation clusters?
Size inversely to cluster proximity and density. If a large opposing cluster sits close to your entry (say within two percent), trade smaller, because a sweep through your level is likely. If the nearest meaningful cluster is far and thin, you can carry more. And always cut size further on high-volatility assets like SOL.
How do I tell a retail cluster from a smart-money cluster?
Retail clusters form fast, near local highs or lows, right after emotional moves, and they get swept. Smart-money clusters build slowly at real structure and absorb repeated tests without flushing. Watch the first test: the crowd panics, conviction holds.
Do liquidation cascades always reverse price?
No. A cascade often overshoots and snaps back, which is the basis of the fade. But cascades can also mark the start of a real trend if there is genuine momentum and rising open interest behind them. That is why you pair the cluster with funding and OI instead of trading it blind.
Is the Hyperliquid heatmap better than CoinGlass?
For Hyperliquid specifically, on-chain data has an edge because the positions are real and verifiable rather than inferred. CoinGlass aggregates across many venues, which is useful for the broad market. For trading Hyperliquid clusters directly, I want the native, on-chain picture.
I rebuilt my account, and my life, on one idea: stop being the liquidity. The traders who get cascaded are not unlucky. They are predictable, and their pain points are printed on the heatmap for anyone willing to read them.
Go pull up the clusters. Find the crowd. Then do not be it.
Nothing here is financial advice. It is one recovered degenerate’s hard-won opinion. Leverage is how I lost everything once. Respect it.
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