Bitcoin's Price Surge Driven by Spot Demand, Not Leverage

Bitcoin's recent price surge has been accompanied by a decline in leverage and open interest, indicating that the rally is driven primarily by spot market demand rather than leveraged speculation. According to Santiment, Bitcoin-denominated open interest fell 11% to 312,600 BTC, its lowest level in nearly a month. This divergence suggests a healthier market structure.

USD-denominated open interest rose 8%, reflecting price appreciation outpacing the decline in contract count. However, this increase is not necessarily indicative of new speculative activity, as it may be due to the higher prices.

The reduced leverage ratio significantly mitigates the risk of cascading liquidations, meaning even if a pullback occurs, selling pressure from forced liquidations would be substantially weaker. Nevertheless, short-term liquidation risks remain, with Bitcoin facing approximately $408 million in short-squeeze risk at $78,180 and $375 million in long liquidation pressure below $76,500.