• Bitcoin’s recent escalation is being stimulated by a heavy increase in integrated trading.
  •  More traders are entering risky positions, increasing the chance of rapid market declines.
  • Analysts warn the high impact could cause a crash if prices start to drop.

Bitcoin’s lately observed value rise above $60 K is being driven by $1.5 billion in leverage. Analysts warn that while the price has surged, the heavy use of leverage could lead to market instability. Previous rallies fueled by leverage have resulted in sharp price corrections, leaving traders vulnerable to big losses.

Leverage Powers Bitcoin’s Rise

Bitcoin’s price increase is largely fueled by leveraged trading. Data shows that $1.5 billion in funding is boosting the sector. Participants are borrowing funds to increase their positions, which is causing the price to climb faster. This brings concerns because leverage tends to make markets more volatile.

BE AWARE: This pump is driven by leverage 🚨

The previous drop (from $64,000 to $59,000) was started by a overdose of leverage. Now, over $1.5B in leverage is fueling the rally again, making it highly risky.

Take care, buddy's! https://t.co/Ja0Q73a8to pic.twitter.com/1LHCWGa6EW

— Maartunn (@JA_Maartun) October 11, 2024

In the past, Bitcoin saw similar conditions. The cost dropped from $64,000 to $59,000, and marketing was a big factor in the decline. Hence, economists are questioning whether a similar trend will develop this time.

Furthermore, Bitcoin’s price has jumped significantly in the past 24 hours, and this increase aligns with the rise in leverage.

Open Interest on the Rise

Another sign of growing risk is the increase in open interest, which shows how many contracts are active in the market. This number has grown alongside Bitcoin’s price, meaning more traders are using leverage. As more traders take on these positions, the chance of forced sell-offs rises.

Read CRYPTONEWSLAND on google news

Open interest has also jumped sharply in the last 24 hours. This increase points to traders entering more leveraged positions. These positions are riskier, and if prices drop, it could trigger a wave of liquidations. 

Moreover, a rise in open interest has often been linked to price corrections. When too much leverage builds up, even small price drops can trigger a chain reaction of forced selling.

Could a Crash Be Coming?

With leverage so high, some are wondering if the token’s rally is setting up for a meltdown.  In the past, markets have collapsed when traders started to exit their positions. A price drop could quickly trigger a chain of sell-offs, leading to a rapid decline. Dealers will be watching closely to see how manipulation changes the market in the days ahead.

disclaimer read more

Crypto News Land, also abbreviated as "CNL", is an independent media entity - we are not affiliated with any company in the blockchain and cryptocurrency industry. We aim to provide fresh and relevant content that will help build up the crypto space since we believe in its potential to impact the world for the better. All of our news sources are credible and accurate as we know it, although we do not make any warranty as to the validity of their statements as well as their motive behind it. While we make sure to double-check the veracity of information from our sources, we do not make any assurances as to the timeliness and completeness of any information in our website as provided by our sources. Moreover, we disclaim any information on our website as investment or financial advice. We encourage all visitors to do your own research and consult with an expert in the relevant subject before making any investment or trading decision.