Bitcoin derivatives market forming ‘dangerous’ setup as hopes of a swift bounce fuel rapid leverage climb: K33

Research firm K33 reports that the Bitcoin derivatives market is exhibiting a structurally concerning pattern, as traders are aggressively adding leverage (evidenced by a 36,000 BTC expansion in perpetual futures open interest) while funding rates climb, signaling risky "knife-catching" behavior following a 14% price correction. K33 Head of Research Vetle Lunde noted that this excess leverage increases the risk of amplified volatility from liquidations if the price continues to fall. This situation contrasts sharply with institutional caution, as CME futures premiums remain near yearly lows. Historically, this divergence has preceded negative price action; six out of seven similar regimes in the past five years saw continued declines over the following month, averaging -16% over 30 days. K33 is now advising a reduction in overall risk, despite maintaining a long-term bullish outlook, as the current drawdown is among the most severe in recent years.

(Source：The Block)