Concerns Arise Over Bitcoin Leverage, Analytics Firm Warns
IntoTheBlock, an analytics firm, has expressed concerns over the surging levels of leverage in the Bitcoin (BTC) market, suggesting a potential overheating.
Lucas Outumuro, the head of research at IntoTheBlock, highlighted in a recent analysis that funding rates have soared to their highest levels since 2021.
Lucas Outumuro explained that funding rates on Binance and Bybit surged to 0.06% and 0.09% respectively, paid every 8 hours. These rates translate to an annualized cost of 93% and 168% for long positions on Bitcoin. Such abnormally high funding rates indicate a heavily skewed long market.
Outumuro emphasized that the overwhelmingly bullish derivatives landscape should serve as a “warning sign” for the crypto market.
The crypto market displays signs of overheating, Outumuro noted. The average 90-day return for the top 20 crypto-assets (excluding stablecoins) listed on IntoTheBlock stands at 103%. Even the poorest performer among the top 20 has seen a 28% rally.
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Furthermore, Outumuro pointed out that the total debt issued through Aave (AAVE) v3 on Ethereum (ETH) has more than doubled this year. Additionally, approximately $700 million worth of Wrapped Bitcoin (WBTC) has flowed into Aave in the same period.
At the time of writing, Bitcoin is trading at $68,462, marking a nearly 4% decline over the past 24 hours.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
