Altcoin Open Interest Reaches $40 Billion, Warning Similar to Pre-October Crash Last Year

As Bitcoin (BTC) continues its upward trend driven by spot demand, a warning has emerged that the altcoin derivatives market is exhibiting a leverage structure similar to that seen just before the massive liquidation event in October last year. According to data from CoinAllies on the 10th, the open interest for altcoin perpetual futures reached approximately $40 billion on the 7th, surpassing Bitcoin's open interest of about $23.9 billion for the first time since December 2024. Michael Busella, co-founder of NeoClassic Capital, explained on CNBC that Bitcoin's initial rise began with the liquidation of short positions, but was later sustained by increased spot buying and demand for call options. In the altcoin market, open interest is expanding alongside price increases, suggesting that funds have shifted to volatile altcoins as Bitcoin's upward momentum continues. In October last year, over $19 billion in leveraged positions were liquidated within a 24-hour period in the digital asset market. The recent leading asset in expanding leverage has been Zcash (ZEC), with ZEC derivatives open interest rising to an all-time high of about $2.4 billion earlier this month. Busella cautioned that the current altcoin market is similar to the situation just before the large-scale liquidations in October last year, advising a cautious approach.

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