In the aftermath of new inflation data indicating easing pressures in the U.S., analysts are closely monitoring the use of leverage in the cryptocurrency market.
Coinciding with this, the open interest (OI) across major altcoins reached a record level of approximately 47 billion dollars, according to Glassnode. This accumulation suggests heightened leverage, potentially magnifying both upward and downward price movements. Meanwhile, spot Ethereum 
$4,710 ETFs in the U.S. witnessed a substantial net inflow of 729 million dollars on Wednesday, driving ETH’s value close to its all-time high. Bitcoin 
$120,893 ETF inflows, however, remained relatively modest.
Warnings Emerge on Volatility After Record Leverage
BRN Research Director Timothy Misir pointed out that the appetite for risk in the markets has surged due to macroeconomic factors and fund inflows from Wall Street. Consequently, Bitcoin surpassed 120,000 dollars, and Ethereum exceeded the 4,700-dollar threshold. Nevertheless, the low implied volatility and record-high altcoin open positions suggest the possibility of sharp price swings at historical resistance levels.
According to BRN’s analysis, options expirations are at multi-year lows, skew metrics are moderate, and panic hedging indicators are limited. This scenario creates room for intensified volatility in the crypto market if there is a significant price breakthrough in either direction.
Glassnode confirmed that the OI for large altcoins reached an all-time high of around 47 billion dollars, while Ethereum options OI hovered near its yearly peak at about 16.1 billion dollars. CoinGlass data also aligns with this trend, indicating rising option OI. This scenario highlights the risk of leverage-induced volatility, which could amplify upward movements and hasten severe market corrections if prices bounce off resistance levels.
Current Status of Bitcoin and Ethereum
On the Bitcoin front, the cost base for short-term investors is around 120,000 dollars. Despite the dip to 112,000 dollars last week, most recent buyers have maintained their positions, creating a favorable environment for testing the recent peak recorded at approximately 124,500 dollars. Misir believes that surpassing this level could set a new target for Bitcoin at 144,000 dollars. However, he cautioned that the high leverage might exacerbate the severity of potential pullbacks.
As for Ethereum, a significant net inflow of 729 million dollars into U.S. spot ETFs was recorded on Wednesday, with the price nearing its November 2021 peak. The close proximity of Ethereum option OI to its yearly highs of around 16.1 billion dollars indicates increased market positioning, signaling a high volatility alert.
