#bitcoin

Over the past 30 days, we’ve seen a notable acceleration in the swings of aggregate open interest. Compared to the relatively calm behavior observed throughout 2023, recent months have brought much sharper and more frequent changes. This shift began shortly after the launch of US Spot #Bitcoin ETFs in January 2024, which marked a turning point in market dynamics. What we’re witnessing is more than just short-term volatility, it reflects a deeper transition in market structure. The dominance of spot trading is gradually giving way to a market increasingly shaped by derivatives.

As leverage becomes more central to positioning, the risks tied to liquidations and forced unwinds grow significantly. This transformation brings both opportunities and vulnerabilities. On one hand, the entrance of institutional capital through spot ETFs has added legitimacy and depth to the market. On the other, it has heightened systemic fragility. The presence of high open interest in leveraged positions means that small price moves can now trigger outsized reactions, creating feedback loops that reinforce volatility.