Bitcoin News Today: Bitcoin's $120k Support: Leverage Reset's Double-Edged Sword?
Aime SummaryBitcoin futures open interest (OI) remains elevated as a liquidation-driven leverage reset cleared over $1.74 billion in four days, signaling ongoing leverage appetite and concentrated risk near the $120,000 support level. According to on-chain analytics firms Glassnode and CoinGlass, the sharp price swings in October have triggered widespread liquidations, with both long and short positions affected. This forced rebalancing has reduced some systemic risk but left aggregate OI still at record levels, maintaining elevated volatility potential [1].
Open interest in BitcoinBTC-- futures has surged to $90.24 billion, down modestly from a weekly peak near $94.12 billion. The high OI reflects strong participation and liquidity in the derivatives market but also amplifies the risk of abrupt volatility spikes when positioning becomes concentrated. Recent sessions have seen swift reversals targeting excess positions on both sides of the market, a sign of the leverage reset in action [1].
The $120,000 price level has emerged as a critical support threshold. Analysts note that Bitcoin has held above this level since October 2, despite multiple retests and intraday dips to $119,700. Sustained stability near this level could signal the formation of a robust base, potentially paving the way for a rally toward $130,000. However, the elevated OI means the risk of sharp pullbacks remains, particularly if leverage resets trigger cascading liquidations [1].
The leverage reset has been driven by a combination of price action and institutional demand. U.S. spot ETF inflows have exceeded $2.2 billion in October, marking one of the strongest waves of institutional buying since April. These inflows have absorbed much of the available supply on exchanges, reinforcing the bullish narrative. Meanwhile, mid-tier holders-wallets with 10–1,000 BTC-have been the primary buyers, offsetting light profit-taking by larger whales. Nearly 97% of Bitcoin's circulating supply is now in profit, a level typically associated with late-stage bull cycles [8].
However, the rapid expansion of leveraged long positions has introduced fragility. Annualized funding rates on perpetual futures have risen above 8%, a level historically linked to increased short-term volatility. The surge in leverage, combined with a sell-side risk ratio rebounding from its lower bound, indicates controlled selling pressure consistent with a healthy bull phase rather than exhaustion [7].
Options markets also highlight the growing volatility. Implied volatility has spiked to a 2.5-month high above 42%, mirroring seasonal trends seen in October 2023 and 2024. The 25-delta skew has shifted from deeply bearish to nearly neutral as traders rotate from defensive hedging to opportunistic call buying. Dealers maintain long gamma positions around current strikes, amplifying two-way price pressure [10].
The leverage reset and elevated OI suggest a market in transition. While the current structure remains constructive-with strong ETF demand, key support near $117,000, and mid-tier accumulation-the rapid buildup of leverage and funding rates introduces near-term fragility. Traders are advised to monitor OI, funding rates, and liquidation flows for risk-managed positioning. If the $120,000 support holds, the path to $130,000 could open, but the market remains vulnerable to resets triggered by cascading liquidations [1].
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