K33 Flags 'Dangerous' Bitcoin Derivatives Market Amid Leverage Spike
K33, a research and brokerage firm, has raised concerns over a 'dangerous' structural pattern in the Bitcoin derivatives market as traders increasingly employ aggressive leverage. This warning comes as Bitcoin experienced a 14% drop over the past week, reaching an intraday low of $89,183 on Tuesday, marking its lowest point since April. The firm highlighted a significant surge in open interest for perpetual futures, increasing by over 36,000 BTC, the largest weekly rise since April 2023. This, coupled with rising funding rates, suggests speculative trading rather than defensive strategies.
K33 cautioned that the heightened leverage could lead to increased volatility due to potential liquidations. Additionally, Bitcoin ETFs have seen substantial sell-offs, with a reduction of 20,150 BTC in a week and nearly 40,000 BTC over the past month. The firm compared the current market conditions to seven historical patterns, noting that six of these instances resulted in further declines in the subsequent month.