Crypto Market Tops $3 Trillion as Leveraged Bets Pile Up

A high-altitude rally with thin air

Crypto is having a moment again. The total market value has re-crossed the $3 trillion mark for the first time since January, with Bitcoin doing the heavy lifting. Bitcoin surged nearly 8% on Monday, touching $87,381 - the highest since January - before retreating to $85,093 on Tuesday.

The run-up coincides with a friendlier macro backdrop. CoinGecko data indicate the market has added over $740 billion in value following the US Treasury's announcement last month to increase buybacks of long-dated bonds. Still, caution flags are up. "If open interest and funding keep accelerating faster than spot demand, the risk of a leverage-driven pullback increases," Ryan Lee, chief analyst at Bitget, said. "Macro has not stopped mattering; for now, Bitcoin-specific demand has been strong enough to outweigh those pressures."

Leverage is back, and it cuts both ways

Perpetual futures, contracts that never expire, make up the biggest slice of crypto trading and act as a read on speculative appetite. Coinglass data show open interest in these perpetuals across tokens has swelled to nearly $160 billion, the most since late October last year. Even after a wave of forced buying lifted prices, open interest kept rising, which signals new leveraged positions are replacing the shorts that were knocked out.