Bitcoin has brought the crypto market back to $3 trillion amid a rise in riskier bets
Kyiv • UNN
The crypto market capitalization rose to $3 trillion following a Bitcoin rally. Open interest in futures has almost reached $160 billion.
Digital assets reclaimed $3 trillion in market value for the first time since January following Bitcoin’s impressive rally, but traders are also increasing leveraged bets in perpetual futures, raising the risk of sharp price swings. Bloomberg reports, writes UNN.
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According to CoinGecko, the market has added more than $740 billion in value since the U.S. Treasury announced last month that it would increase buybacks of long-term bonds. Leverage is rising along with prices. Open interest in perpetual futures on tokens has climbed to nearly $160 billion—the highest level since late October last year, according to Coinglass data.
On Monday, more than $920 million in bearish bets were liquidated amid the price surge. The ongoing closing of short positions could trigger a squeeze as traders rush to buy back assets to close losing trades, creating additional upward pressure on prices. However, open interest continued to rise, indicating that new leveraged positions were entering the market even as shorts were being forced out.
A squeeze usually destroys open interest. This one did not, which means positions are immediately being replaced. Traders are chasing the move rather than reducing risk. That is why the next 5% in either direction will be faster than expected
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