As an analyst at Cryptalist, I closely monitor structural changes in the Bitcoin market. Recent data points to a worrying signal: leverage in the derivatives market is recovering significantly faster than real demand. This creates a fragile structure that could lead to a new wave of forced liquidations.
After a major correction, when the Bitcoin price fell from levels above $120,000 in late 2025 to around $63,600, open interest (OI) dropped from $45–47 billion to $21.6 billion. This confirmed the massive deleveraging we observed. However, OI has now stabilized, and traders are beginning to return to high-risk strategies, despite the price remaining far from its all-time highs.
Fragile Structure in the Derivatives Market
A key indicator is the estimated leverage ratio. Across all exchanges, it has recovered to approximately 0.241 and is holding near its rising 100-day moving average. This means the market is increasing derivative exposure relative to exchange reserves, while spot prices remain structurally weak. Such a divergence is a classic sign of vulnerability. When leverage grows against a weak price structure, the market becomes extremely sensitive to any triggers that could set off a cascade of liquidations.
Liquidation data confirms that the recent upward price movement was partly mechanical. Spikes in short liquidations amplified rebounds, especially after major downturns. This suggests that part of the rally was driven by short squeezes rather than new spot demand. Long positions suffered just as much—their liquidations surged sharply during the February crash and the June sell-off.
What Will Determine the Next Move
Currently, the market is in a zone prone to squeezes. Open interest has stopped declining, leverage is rising, funding rates have turned positive, and the Bitcoin price is attempting to recover from the $60,000 area. The next major move depends on a simple condition: either spot demand confirms the rebound, or leverage will recover faster than real buying power.
In the first case, the rally will gain a sustainable foundation. In the second, the BTC market will once again become vulnerable to a wave of forced liquidations.
My expertise: The market is currently in a dangerous phase. The recovery of leverage without backing from real demand is not a sign of strength, but rather an accumulation of hidden risk. Traders should be extremely cautious: the current configuration makes the market highly sensitive to sharp movements, and the next correction could be just as painful as the previous ones.