Bitcoin Treads Water as Leverage Builds Again… “Short-Term Short Squeeze vs. Warning of Excess Liquidations”

As Bitcoin continues to trade sideways within a $62,000–$71,000 range, the market is seeing leverage rapidly build up again.

According to Decrypt on the 16th (local time), the annualized basis on 3-month futures at major centralized exchanges such as Binance, OKX and Deribit has widened from about 1.5% to around 4% since Feb. 13. This indicates futures are trading at a premium to spot, and is interpreted as a sign that risk appetite in the market is recovering. Funding rates tracked in the same period have also been rising, reinforcing a structure in which long positions dominate.

A similar trend is being detected in the options market. The 25-delta skew (an indicator of call demand relative to puts) eased from -10 to around -4, suggesting reduced demand for downside hedges. However, the fact that leverage is expanding without sufficient trading volume is a source of concern. Nick Ruck, head of research at LVRG, warned that while “in the short term there is potential for a leverage-driven rebound and a short squeeze,” “retail investors typically enter late and take the biggest hit during liquidation phases.”

Coinbase CEO Brian Armstrong recently said data show retail investors are stepping in to “buy the dip,” but some analysts argue the current setup is approaching a high-risk zone. Ryan Yoon, senior analyst at Tiger Research, assessed that “sentiment is improving, but volume is not supporting it. If a sudden drop occurs, it could trigger the last major liquidation.” Bitcoin is currently trading around $68,600, down about 2.5% over the past 24 hours.