**Futures Market Leverage and Its Impact on Bitcoin Volatility**

The leverage in the futures market is a focal point of current interest and concern. Institutional players, primarily trading through the CME, engage in hedges with set maturities and rarely liquidate their positions. In contrast, retail traders in native cryptocurrencies experience more frequent liquidations.

Open Interest has surged by approximately $6B, reaching $28.3B, just shy of its all-time high of $31B. This increase is driven by the volatility surrounding the FED rate cut. Institutional investors are showing strong conviction in Bitcoin's upcoming volatility, with minimal risk of liquidation unless significant fluctuations occur outside CME operations.

Bitcoin funding rates indicate that investors are earning $2M/day for holding long positions in Bitcoin futures, reflecting substantial demand. While this is not excessively high, it suggests potential for sharp corrections to eliminate over-leveraged players.

Significantly, short liquidations have risen by about $493 million, indicating potential for short squeezes. This could lead to a rapid return to an upward rally post-correction, driven by the elimination of large speculative positions.

Written by Percival