Traders’ strong appetite for leverage could be creating the perfect scenario for cascading liquidations.
Bitcoin (BTC) soared above $72,000 for the first time ever on March 11, marking a 9.5% increase over the past week. The rally has seen significant volatility, highlighted by a 4.8% intraday rise to $70,055 on March 8, followed by a 5.9% dip to $65,935.
As a result, Bitcoin bulls are wary of celebrating this new all-time high, particularly due to the surge in leverage demand through BTC futures contracts.
Analysts have pointed out that the $35.8 billion in Bitcoin futures open interest poses a risk, as traders often over-rely on leveraged positions.
