⚠️ Volatility Alert: Why Leverage is Shaking the Market
👽✌🏻🔥#BTCBreaksATH
🎯 The Leverage Trap
The recent increase of 14.11% in Open Interest was a harbinger of the volatility that followed. When markets move against a large number of leveraged positions, forced liquidations by exchanges create a "snowball effect" that exaggerates price movements, both up and down.
📊 Mass Liquidations
In episodes like this, it is not uncommon to see hundreds of millions of dollars in long or short positions being liquidated in a few hours. This generates spikes in selling or buying volume that temporarily distort the fair price of the asset.
🛡️ How to Protect Your Portfolio
In such environments, it is crucial:
· Reduce leverage usage.
· Adjust stop-loss levels to avoid being liquidated by market "noise."
· Stay calm and avoid making impulsive decisions based on panic.
💡 Extra Fact: Analysis platforms like DeFiLlama (mentioned in the first image) are essential tools for monitoring on-chain metrics such as TVL and Open Interest, allowing for anticipation of potential periods of high volatility.
