Crypto Market Surges Past $3 Trillion as Leverage Fuels Volatility Warning
The cryptocurrency market has regained its value of over $3 trillion for the first time since January, fueled by Bitcoin's sharp rally. However, this growth is accompanied by a surge in leveraged positions, which increases the risk of abrupt price swings.
Total open interest in perpetual futures has reached approximately $160 billion, the highest level since late October last year, according to CoinGlass. On Monday alone, about $920 million in short positions was forcibly liquidated as prices jumped.
Market participants are focusing on the structure of the rally. 'Normally, when a short squeeze happens, open interest falls, but that hasn't happened this time,' BTC Markets analyst Rachel Lucas said. 'That means positions are being replaced immediately with new ones. Traders aren't reducing risk. They're chasing the rally instead.'
Rising open interest in perpetual futures can be a healthy sign when it is backed by spot buying, but if it grows faster than the spot market, trading becomes reflexive. Even a modest decline could trigger a chain of long liquidations.