Derivatives update: Leverage remains elevated in perpetuals

Perpetual swaps have seen massive growth in the open interest, leading the BTC denominated OI to explode beyond 2021 highs above 270,000 BTC.
Source: Skew, Laevitas

The BTC denominated open interest sits at elevated levels of 269,000 BTC after surging 11% on May 4th as we approached the FOMC meeting.

The open interest quickly fell following the FOMC but has since risen again as leveraged exposure in the market grows.

This leaves the market vulnerable to squeezes, both towards the upside but also towards the downside. While the open interest is always net neutral, funding rates can be used to assess the most aggressive contributor in the build-up. Most of the build-up in OI has been accompanied by funding rates below neutral.

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