Bitcoin (BTC) perpetual contracts denominated in Tether USD (USDT) have been drawing significant attention. Recent data from CryptoQuant shows signs of overleveraging, with the “open interest to USDT reserve ratio” reaching an all-time high of 0.593 on Nov. 10. This indicates a potential imbalance in the market. Ki Young Ju, the firm’s CEO, pointed out that the current levels are 2.7 times higher than in February when the ratio first crossed the dangerous zone in 2024. This raises concerns about the stability of the market.Potential Painful Pullback
There is uncertainty about how high Bitcoin will go, but Ki Young Ju remains bullish on BTC in the long term. He emphasized that there will be a painful pullback once the leverage unwinds. This prediction adds to the volatility and uncertainty surrounding Bitcoin’s price. In the few hours following CryptoQuant’s CEO post, Bitcoin registered a new all-time high of $93,523.65. However, this was quickly followed by a 5% correction, and the price is currently trading around $88,701.71. Despite the correction, the liquidations volume is still 5% down in the past 24 hours, totaling nearly $872 million. This shows that the market is still adjusting to the recent changes.Healthy On-Chain Metrics
Despite the risk of unwinding leverage pressuring BTC’s price down, other on-chain metrics remain healthy. CryptoQuant analyst Martuun pointed out that retail investor demand reached a 52-month high in the past 30 days. This indicates a strong interest from individual investors in Bitcoin. He added that it is impossible to ignore that retail trading is fully back, with Dogecoin surging, high funding rates, and a spike in Google searches for Bitcoin. This shows that Bitcoin is still a popular asset among retail investors.Furthermore, according to a Glassnode report, the recent Bitcoin price spikes are predominantly driven by spot buyers on Coinbase’s market. The daily Cumulative Volume Delta (CVD) for Bitcoin’s spot market on Coinbase reached $143 million, nearing the $152 million peak seen in March. This movement in the US market reflects a steady rise in buyer-side pressure, reinforcing the robust demand from investors who view Bitcoin as an increasingly valuable asset. Since July, each Bitcoin rally has seen strong buy-side interest on Coinbase, signaling solid spot market demand. This demand trend also extends to spot ETFs, with US assets under management in Bitcoin spot ETFs surging by $8.8 billion over the past 30 days, surpassing the $6.9 billion increase in CME futures open interest. The preference for spot-driven ETFs reflects a broader shift in investor sentiment toward direct exposure over futures-based speculation.Perpetual Futures and Spot Buying
While perpetual futures also saw a recent premium peak of $1.59 million per hour on Nov. 12, it remains below March levels. This indicates that spot buying, not leverage, is the primary driver of Bitcoin’s current rally. The data shows that the market is shifting towards a more stable and sustainable growth model, with spot buying playing a crucial role. This trend is likely to continue as investors become more cautious about the risks associated with leverage.In conclusion, Bitcoin’s market is experiencing significant changes and challenges. The overleveraging situation and the potential for a painful pullback are concerns that need to be monitored closely. However, the healthy on-chain metrics and the strong demand from spot buyers provide some optimism for the future of Bitcoin. As the market continues to evolve, it will be important to stay informed and adapt to the changing conditions.
