The market is showing a curious paradox: the fear and greed index has pulled back to 65 points after a surge to 74, yet open interest (OI) in bitcoin futures is sliding to lows we haven't seen in nearly five months. This comes even as the leading cryptocurrency gained 22.4% over the week and is trading around $79,000 at the time of writing, only slightly retreating from the psychological $80,000 mark.
Market Structure: Cautious Optimism
The key signal is the decline in OI from 645,760 BTC on August 14 to 587,584 BTC. Typically, such a powerful move, like from $62,000 to $80,000, is accompanied by an accumulation of leveraged longs. This time, we see the opposite. This suggests that a significant portion of the momentum was driven by short covering, not aggressive bets on upside. Funding rates for perpetual futures remain below 10% annually, indicating a moderate bullish sentiment without overheating.
Moreover, the collateral structure is shifting: OI in futures with cryptocurrency collateral has fallen to roughly 52,000 BTC — an all-time low, accounting for just 11% of the market. This is a sign that traders prefer not to risk collateral in volatile assets.
Spot Demand and ETFs: The Foundation of the Rally
Notably, amid declining derivative activity, the spot market looks confident. CryptoQuant's Bull Score indicator jumped from 30 to 80 over the week — the highest since October 2025, with eight out of ten tracked on-chain and market metrics in bullish territory. Visible spot demand is growing at the fastest pace since late December, and the simultaneous increase in demand on both spot and futures is being recorded for the first time since early October.
U.S. spot bitcoin ETFs continue to attract capital: on August 25, inflows totaled $314.3 million, with $284.4 million going to BlackRock's IBIT. This marks the seventh consecutive positive session. Institutional money is entering the market through regulated instruments rather than margin trading — a healthier and more sustainable growth model.
XRP: The Exception to the Rule
Against this backdrop, XRP stands out. After a 42% weekly gain, the estimated leverage ratio on Binance rose to 0.21 — the highest since January. Futures trading volume reached $6.4 billion versus $1.2 billion on spot, and the long-to-short ratio on Binance is roughly two to one, while among large traders it's nearly three to one. This is a classic picture of an overheated market: with such an imbalance, any downward move could trigger a cascade of forced liquidations. On August 26, XRP already corrected 5% to $1.44, and this could be just the beginning.
My assessment: the current bitcoin rally looks more sustainable than it appears at first glance. The absence of overheating in derivatives is a positive signal, reducing the risk of a sharp correction. However, the XRP story reminds us that emotions still dominate in altcoins, and that's where heightened volatility should be expected. For bitcoin, the key factor remains institutional demand through ETFs, which continues to fuel growth without excessive leverage.