Yeliz Akmaca 
Bitcoin (BTC) surged past $116,000 this week as investors increased leveraged positions ahead of the Federal Reserve’s expected rate cut. According to CryptoQuant, open interest in derivatives markets rose to $37.6 billion, signaling a significant increase in speculative leverage. This trend highlights renewed risk appetite in the crypto market.
Leveraged Positions Increase Ahead of Fed
Investors are ramping up positions ahead of Wednesday’s Federal Reserve (Fed) policy meeting, where officials are expected to lower interest rates by 25 basis points. This anticipation may further fuel gains in digital assets.
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Open interest rose 14% weekly, approaching $40 billion
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Prediction markets price a 92.6% chance of a rate cut
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Spot Bitcoin climbed 7.8% from $107,600 to $116,000
Analysts note that the rally is driven by slowing inflation and expectations of a gradual Fed rate cut. However, increased leverage also raises market volatility risks.
Leverage and Market Risk
Bitget CEO Gracy Chen commented, “Rising leverage signals renewed confidence, but Bitcoin could see a correction toward $108,000 if it fails to hold above $112,000.” Leveraged trades amplify potential gains but also increase liquidation risks during price drops.
Key Risks:
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Rapid liquidations if Bitcoin falls below support levels
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Rising volatility and sudden price corrections
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Increasing speculative risk appetite
Fed Policies and Crypto Market Impact
Data from prediction platform Myriad shows investors strongly pricing in a quarter-point Fed rate cut. Analysts say higher liquidity may boost crypto momentum. Conversely, cautious Fed messaging could trigger short-term volatility.
This activity in Bitcoin derivatives markets tests global liquidity and serves as a barometer of investor confidence. ETF inflows and easing trade tensions continue to support market momentum.
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