The cryptocurrency derivatives market is experiencing high pressure, with industry leaders warning about the BTC/USDT market's overleveraging.
BTC/USDT Market Overload
CryptoQuant CEO Kim Young Ju disclosed that the BTC/USDT market was over-leveraged. The perpetual trading leverage grew by 2.7x from the start of the year. The OI to USDT reserve ratio reached 0.5, the highest since 2021. An analyst pointed out that increased leverage could cause market volatility, with borrowed funds for BTC trading hitting $31 billion.
Response to Increased Funding Rates
Kryptainium Capital's CEO Daniel Yan tweeted that BTC perpetual funding reached 0.05%, signifying a 50%+ annual cost on long positions. Despite the surge, Yan expressed concern over lacking equity rally. Analysts from QCP Capital also highlighted risks of position cutbacks and overleverage in the market.
Bitcoin's Future: Continued Uptrend?
Some believe Bitcoin's uptrend may continue, as the cryptocurrency hasn't faced significant resistance since the bull run started. Following Trump's election victory on November 5, Bitcoin hit a new all-time high crossing $92,000. Meanwhile, BTC and ETH options anticipate continued upward trends.
The cryptocurrency market stands at the brink of substantial changes. While some experts are optimistic about growth, others warn of potential impacts from market overload.
