Bitcoin’s skyrocketing leverage suggests the crypto market may be overheated: IntoTheBlock
According to analytics firm IntoTheBlock, Bitcoin's (BTC) skyrocketing leverage could indicate that the crypto market is overheating.
Lucas Outumuro, the company's head of research, says in a new analysis that funding rates have reached their highest level since 2021.
“Funding rates for Binance and Bybit reached levels of 0.06% and 0.09% yesterday and were paid out every 8 hours. These fees represent an annual cost of 93% and 168%, respectively, for a long position in Bitcoin. The unusually high funding rates indicate a market that is leaning very heavily to the long side.”
According to Outumuro, the overly bullish derivatives picture should be a “warning sign” for the crypto market.
“The crypto market is showing signs of overheating. The average 90-day return for the top 20 crypto assets (excluding stablecoins) listed on IntoTheBlock is 103%. The worst performer in this top 20 gained “only 28%.”
Additionally, the analyst notes that the total amount of debt issued via Aave (AAVE) v3 on Ethereum (ETH) has more than doubled this year. According to Outumuro, around $700 million worth of Wrapped Bitcoin (WBTC) has flowed into Aave this year too.
Bitcoin is trading at $68,462 at the time of writing. The highest valued crypto asset by market capitalization has fallen by almost 4% in the last 24 hours.
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