#Bitcoin Price Faces Further Downside Risk as Leverage Surges and Ethereum Gains Momentum, K33 Warns

Bitcoin ($BTC ) is teetering on the edge of further price declines, according to a new report from K33 Research, with a surge in leverage and a significant capital rotation into #Ethereum ($ETH ) signaling heightened vulnerability for the world’s leading cryptocurrency. Despite a modest 1.40% gain in BTC’s price, the market is grappling with aggressive long positioning and a potential shift in investor focus toward Ethereum, which has soared to a new all-time high. This dynamic could set the stage for increased volatility and a possible liquidation cascade, challenging Bitcoin’s dominance in the near term.

Leverage Surge Signals Trouble for Bitcoin

The K33 Research report, authored by Head of Research Vetle Lunde, highlights a concerning buildup in Bitcoin perpetual futures. Notional open interest has skyrocketed to a two-year high of over 310,000 BTC ($34 billion), marking a 41,607 #BTC increase over the past two months. A sharp weekend spike of 13,472 BTC further underscores this trend, suggesting a critical inflection point for the market.

Compounding the risk, annualized funding rates for BTC perpetuals have jumped from 3% to nearly 11%, reflecting aggressive long positioning amid stagnant price action. Lunde warns that this setup mirrors leverage buildups observed in the summers of 2023 and 2024, both of which culminated in sharp liquidation cascades in August. Unlike those periods, however, the current open interest peak has arrived later in the month, potentially signaling a prolonged consolidation phase that could catch dip buyers off guard.

“The risks of long squeezes in the near term are elevated,” Lunde cautioned, urging traders to adopt conservative strategies until the market sheds its excess leverage. Without a clear catalyst to drive prices higher, Bitcoin remains vulnerable to a sharp correction, particularly if leveraged positions unwind rapidly.

Ethereum’s Surge Steals the Spotlight...

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