Analysts Warn of Liquidation Risks Amid Rising Open Interest in Cryptocurrencies

The analytical platform Santiment reports an increase in open interest in cryptocurrencies amid market recovery. The volume of open positions in bitcoin derivatives is $23.4 billion, for Ethereum – $15.5 billion, and for Solana – $2.7 billion. The increase in leverage raises the risk of large-scale liquidations in the event of a market reversal. Meanwhile, traders are more actively returning capital to the market and using leverage, indicating increased participant activity and willingness to take risks.

According to analysts, peaks in bullish sentiment in September and bearish in October coincided with local bitcoin price reversals. Experts note that increased leverage could amplify the decline if the market suddenly turns. Mass position closures could trigger cascading liquidations and increase volatility during price drops. Analysts believe that at this stage, bitcoin acts as a kind of "anchor," while other assets, such as altcoins, have more room for growth.

In recent months, Ethereum has shown the most stable growth in open interest, with the indicator showing positive dynamics since August. The Solana indicator remains more volatile, and open interest in bitcoin is still significantly below spring peaks. Santiment experts also draw attention to the connection between retail traders' sentiments on social media and bitcoin price movements. Extreme displays of optimism or fear often serve as counter-signals for assessing potential market entry points. The platform recommends monitoring moments when sentiments become extremely bullish or bearish, as local market reversals are possible during such periods.