Bitcoin (BTC) has been identified as “one of the most leveraged assets in history,” as expressed by Joao Wedson, Founder and CEO of Alphractal. The surge in perpetual futures trading has significantly altered market trends.

Bitcoin OI Hits Fivefold 2021 Levels

In a post on X, Wedson explained that perpetual trading surges indicate that traders, funds, and high-frequency desks are leaning towards leverage rather than spot trading. This trend often intensifies during high volatility, particularly in sharp market downturns.

Open interest (OI) has recently surged to peak levels in October, nearing five times the figures recorded at Bitcoin’s all-time high in November 2021. This trend underscores the drive towards quick returns facilitated by high-risk leverage.

The surge in OI distribution across exchanges illustrates how intensely platforms have encouraged leveraged products. Notably, BitMEX has seen a drop from controlling 90% of the market in 2017 to just 0.65%, while newer exchanges have taken the lead.

Binance commands approximately 30% of the market share, with Bybit not far behind at 16.7%. Wedson also noted that Alphractal’s current long-short positioning model reflects 72.4% in longs (valued at about $25.72 billion) and 27.6% in shorts (valued around $9.79 billion), indicating a significant skew towards long positions despite historical data suggesting better outcomes for short sellers.

Wedson remarked on this positioning as “strange” yet pointed out that extreme leverage could clarify this disparity, as Bitcoin tends to rise while leveraged longs face quick wipeouts.

BTC’s $91K Breakout

Bitcoin broke through the $91,000 threshold last Thursday, marking nearly a 5% increase amidst a general market resurgence. Analyst Ted Pillows notes that Bitcoin is nearing resistance levels between $93,000 and $94,000, suggesting that a successful breakthrough could propel prices towards $100,000.

However, a possible failure to reclaim this resistance might provoke a short-term correction back towards the $88,000 range. Another market commentator, “Captain Faibik,” has indicated that Bitcoin may be exhibiting a Descending Broadening Wedge pattern on the 4-hour chart, suggesting a potential bottom, but cautions that bullish momentum requires reclaiming the $100,000 resistance level to trigger a rally in December.