The structure of liquid caesium undergoes a sharp change at around 4 GPa from a simple liquid to a low-coordination complex structure. This mirrors a similar change in the crystal structure at this pressure. Here, we show that both changes are accurately described in good agreement with experiment by density functional theory calculations, which shed light on the nature of the liquid structure and its electronic origins. Analysis of the wave function character shows s-d hybridization, but not s-d transfer, in both solid and liquid at the pressure of the complex Cs-III phase. This implies that a nearly free electron picture is more appropriate than one based on the atomic orbitals. The similarity of s-d hybridization in crystal and liquid phases indicates that hybridization is a general consequence of densification, rather than being induced by a particular crystal structure. The free-electron picture predicts that stable structures will have diffraction peaks associated with the Fermi vector, and this is borne out by comparison with experiment.