Bitcoin News Today: Altcoin leverage balloons to $44B, 69% open interest surge sets up whipsaw volatility

Altcoin leverage has surged to a record $44 billion, signaling heightened risk of sharp market swings should momentum falter, according to a July 23 report by data provider Glassnode [1]. The increase reflects concentrated speculative activity in Ethereum (ETH), Solana (SOL), XRP, and Dogecoin (DOGE), where combined futures open interest rose 69% from $26 billion at the start of July [1]. Daily open interest additions have exceeded two standard deviations for 12 consecutive sessions—the longest stretch on record—indicating aggressive leverage accumulation by traders [1].

The positioning, however, has become costly. Long-side futures traders have paid $32.9 million in cumulative funding fees over the past month, approaching levels seen during Bitcoin’s March peak ($42 million) but still below the $70 million peak observed in late 2024 [1]. Elevated funding rates highlight trader conviction but also underscore a crowded market susceptible to rapid unwinding if price stagnation or reversals occur [1].

The shift in capital has tilted sharply away from Bitcoin. Ethereum’s share of total futures open interest climbed to 38%, its highest level since April 2023, while Bitcoin’s share fell to 62% [1]. Perpetual futures volume for Ethereum recently surpassed Bitcoin’s for the first time since the 2022 market bottom, marking an unprecedented dominance skew [1]. This rotation reflects traders chasing higher-beta assets as Bitcoin, which reached an all-time high in early July, consolidates after its $1 trillion realized capitalization milestone [1].

Glassnode’s Altseason Indicator turned positive on July 9, driven by concurrent inflows into Bitcoin and Ethereum, rising stablecoin supply, and a momentum crossover in altcoin market capitalization [1]. Altcoins added $216 billion in value over two weeks, one of the largest gains on record. However, the report warns of systemic fragility: most altcoins are now moving in lockstep with one another while diverging from Bitcoin, a pattern that amplifies the risk of cascading liquidations under leverage-heavy conditions [1].

The report notes that while the altcoin rally is real, leveraged longs face “high incoming volatility” that could trigger significant downturns [1]. Bitcoin, which still accounts for 64% of total crypto market value, remains a critical benchmark. A weakening BTC could cap altcoin momentum, as large inflows often depend on Bitcoin’s performance [1].

Source: [1] [title: Altcoin leverage balloons to $44 billion, setting up whipsaw volatility] [url: https://cryptoslate.com/altcoin-leverage-balloons-to-44-billion-setting-up-whipsaw-volatility/]