PiCK
Crypto Market Cap Reclaims $3 Trillion for First Time in Eight Months as Leverage Warning Grows
Summary
- Bitcoin’s sharp rally helped the total cryptocurrency market capitalization reclaim the $3 trillion level for the first time in about eight months.
- Crypto perpetual futures open interest (OI) climbed to $160 billion, raising concerns that rising leverage could fuel short-term volatility.
- Experts said the risk of a leverage-driven correction increases when open interest and funding rates rise faster than spot demand.
Forecast Trend Report by Period
Bitcoin’s recent surge has pushed the total cryptocurrency market capitalization back above $3 trillion for the first time in about eight months. Leverage in the derivatives market has also risen rapidly, fueling concerns over sharper near-term volatility.
Bloomberg reported on September 22 that Bitcoin climbed nearly 8% in a single day on September 21, topping $87,300. It was the highest level since January. The move also wiped out $920 million of short positions in the derivatives market that day.
Bitcoin’s advance lifted the total crypto market cap above the $3 trillion mark. It was the first time since January that the sector’s market value had exceeded $3 trillion.
The rally also drove a sharp increase in derivatives positions. According to CoinGlass, open interest in the crypto perpetual futures market recently rose to $160 billion, the highest level since late October last year.
If open interest and funding rates in perpetual futures rise faster than spot buying, leverage-driven liquidations could magnify price swings. Caleb Lin, chief trader at QCP Group, said an increase in open interest alongside spot demand is healthy. If derivatives positions expand faster, however, the market can become self-reinforcing. Even a small pullback can trigger long liquidations, pushing prices lower and leading to further deleveraging.
That is why spot buying needs to keep pace for the rally to continue. Ryan Lee, chief analyst at Bitget, said the risk of a leverage-driven correction rises when open interest and funding rates increase faster than spot demand.
