Bitcoin (BTC) and the broader crypto market are witnessing strong demand for bullish leveraged plays, a sign the market is overheated. While market makers’ hedging is likely to keep BTC supported at around $100,000, the heightened activity raises the risk of pullbacks for other cryptocurrencies.
Bitcoin, the leading cryptocurrency by market value, tapped a record high above $103,000 early Thursday, following President-elect Donald Trump’s decision to appoint pro-crypto Paul Atkins as chairman for the Securities and Exchange Commission (SEC).
The breakout sent traders chasing the price rally, pushing funding rates for perpetual futures skywards, a sign of growing demand for and overcrowding in long positions. In this scenario, a slight pullback can result in large liquidations (forced selling by exchanges due to margin shortages) and increased downside volatility.
Support may come from the options market, according to Griffin Ardern, head of options trading and research at crypto financ
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