A high-altitude rally with thin air
Crypto is having a moment again. The total market value has re-crossed the $3 trillion mark for the first time since January, with Bitcoin doing the heavy lifting. Bitcoin surged nearly 8% on Monday, touching $87,381 - the highest since January - before retreating to $85,093 on Tuesday.
The run-up coincides with a friendlier macro backdrop. CoinGecko data indicate the market has added over $740 billion in value following the US Treasury's announcement last month to increase buybacks of long-dated bonds. Still, caution flags are up. "If open interest and funding keep accelerating faster than spot demand, the risk of a leverage-driven pullback increases," Ryan Lee, chief analyst at Bitget, said. "Macro has not stopped mattering; for now, Bitcoin-specific demand has been strong enough to outweigh those pressures."
Leverage is back, and it cuts both ways
Perpetual futures, contracts that never expire, make up the biggest slice of crypto trading and act as a read on speculative appetite. Coinglass data show open interest in these perpetuals across tokens has swelled to nearly $160 billion, the most since late October last year. Even after a wave of forced buying lifted prices, open interest kept rising, which signals new leveraged positions are replacing the shorts that were knocked out.
That's what made Monday so volatile: liquidations wiped out more than $920 million in short positions. "A squeeze normally destroys open interest," said Rachael Lucas, analyst at BTC Markets.
QCP Group's Caleb Lin is watching the same pressure gauge. "The main thing to watch is leverage running ahead of spot," he said.
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Flows, altcoins and what to watch next
Institutional interest is heating up again. US spot Bitcoin ETFs took in $999 million on Monday, the biggest one day net intake since Oct. 6, when Bitcoin was above $126,000 at its all-time high.
It was not just Bitcoin. Privacy-focused Zcash ripped higher, and the Hyperliquid blockchain's native token, HYPE, notched a fresh all-time high. Still, traders are not convinced this is all stickiness and no froth.
"Short squeezes produce price, they don't produce holders," Lucas said. She is watching whether spot demand takes over from forced covering in the week ahead.
For your money, here is the takeaway: spot interest is back, leverage is building, and both can amplify moves in either direction. If the next 5% is quicker than you expect, this is why.
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