The Bitcoin derivatives ecosystem is witnessing the indications of a surging leverage. As per the exclusive data from Glassnode, open interest in Bitcoin ($BTC) perpetual swaps shows a staggering 15.6% jump since March’s start. This spike signifies a considerable growth in leveraged positions amid market’s recovery from its recent low levels.

Bitcoin Leverage Builds While Traders Carry out Repositioning

Bitcoin’s building leverage indicates the traders’ repositioning efforts as the market has effectively rebounded from the lows seen recently. Open Interest takes into account the number of unresolved contracts existing in the market. The increase in this metric usually highlights a rise in speculative activity. Hence, the Bitcoin traders are reportedly getting ready for bigger market moves.

Nonetheless, despite OI upsurge, Bitcoin’s mean funding rate has displayed a decline. This metric is currently standing at -0.023%. This suggests traders’ movement toward short positions. In this respect, they are betting against a likely Bitcoin price rally. Particularly, the traders are recompensing a premium for holding the respective positions.

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Apart from that, the 7-day moving average has significantly dipped in the case of long-side funding premiums. At present, this metric is trending low at $88K per hour. This trend denotes a plunging appetite for when it comes to long exposure, fortifying the dominance of short bias in the perpetual swap sector.

Likely Liquidation Cascades Pose Risk Despite Wide Bullishness and Optimism

The technical data indicates that Bitcoin’s perpetual open interest is reaching multi-week highs around the $8B spot. Additionally, the surge in trading volumes also denotes the potential for the volatility to spike abruptly if the market sees a sudden shift. Concurrently, social behavior remains widely bullish amid optimism in exchange-traded fund flows. However, as the leverage stack is substantially high, a real risk is posed by potential liquidation cascades.

According to Glassnode’s data, the persistence in the bullish momentum, a short squeeze could be triggered by short positioning. Nevertheless, as the leverage is elevated on a wide scale, the market stays highly sensitive to technical breakouts and macro triggers. This means that the volatility could spike in any direction. At the moment, amid the broader trader brace for a sharp move, the market onlookers and traders are looking at the likely price action of Bitcoin.