Bitcoin Rebound Risks Rise as Traders Return to Leverage
CryptoQuant analysts have issued a warning about potential risks to Bitcoin's rebound. According to Darkfost, a CryptoQuant analyst, traders returning to leveraged positions pose a risk of new waves of liquidations in the bitcoin market.
Bitcoin experienced its sharpest deleveraging since 2023, with open interest on Binance falling below its 180-day average. Despite this decline, open interest remains elevated at $9.6 billion compared to the 180-day average of $8.3 billion, or about 37%.
The return of traders to futures trading has driven the current rebound, but Darkfost notes that excessive leverage can trigger new waves of forced position closures. He warned that a market with high levels of leverage can lead to further liquidations.
CW8900, another CryptoQuant contributor, highlighted the actions of retail investors as a contributing factor to the decline in spot demand. Retail investors have been selling their holdings even as prices recover, while large holders continue to accumulate Bitcoin.