epeating the situation from the beginning of the year, bitcoin perpetual futures linked to Tether (USDT) look overleveraged and overextended, as the open interest to USDT reserve ratio hit a record high. CryptoQuant’s CEO says this can bring about a painful correction and a flush out once the leverage is unwound.
Healthy On-Chain Metrics
But other on-chain metrics are still robust as retail buying demand has hit a 52-month high and, the spot buying volume surged on Coinbase. This implies the current rally is a function of fundamentals and real demand and not frothy levers.
Shift Toward Spot Exposure
However, the growth in the US Bitcoin Spot ETF assets has been higher than the increase in CME futures Open Interest showing investors’ preference for direct crypto exposure over leveraged futures bets is quite high, which is a great sign.
Bitcoin Spot Buying Outpaces Risky Future
On the flip side, high leverage ratios are an issue of concern in Bitcoin futures, but the current market seems to be underpinned by sound spot buying in what may herald a stronger rally as investors chase direct Bitcoin holdings.
