Bitcoin open interest collapses to 12% as short squeeze fades

Bitcoin's crypto-margined futures open interest has fallen to about 12% of the market, down from near-total dominance in 2019 and 2020, per Glassnode's long-run metric.

A crypto-margined position is collateralized in the asset being traded, so a price drop shrinks the buffer at the exact moment the trade goes against you—a feedback loop that can trigger a margin call just as the market moves fastest. Stablecoin-margined positions sit in dollars, keeping collateral value steady while the trade swings.

The shift toward stablecoin collateral mirrors how the broader derivatives market has matured. Coinbase opened U.K. derivatives trading through Hyperliquid with up to 50x leverage this month, Bitcoin ETFs drew $854 million over five days as rate-hike bets faded, and Strategy trimmed its own Bitcoin stack. Bitcoin rebounded from around $57,000 to a weekly close near $79,175, up about 1.88% today after months of low-volatility drift between $60,000 and $68,000.

The 24-hour liquidations are a textbook short squeeze: $570.08 million wiped, shorts hit harder at $329.60 million versus $240.48 million in longs, with Bitcoin's $295.41 million slice the largest and a $103.54 million BTC position on Bitget the single biggest blowup, per CoinGlass data.

Two independent stories

But that squeeze and the collateral shift are not the same story, even if they show the current state of the crypto market. Stablecoin margin has been the dominant structure for years, but the trend has been moving one way the whole time: dollar collateral steadily displacing crypto as the backing for leveraged bets.

A broader access to fiat markets simply increases the exposure of investors looking for ways to trade crypto, which in turn makes the coin less susceptible to major price movements after disrupting trades.

Leverage is leverage

For the markets, leverage is leverage no matter what backs it—dollar margin didn't cause this week's liquidations, and it won't prevent the next ones. Based on this data alone, the Bitcoin squeeze may not be over. The two data points back this up, even if they are independent. One is the slow architecture of the market, the other the noise of its daily movements.

With open interest hovering at $140 billion and 24-hour liquidations up 128%, the market is defined by maximum leverage and fragile conviction. A dense cluster of freshly built short positions means reclaiming key zones could trigger another sharp squeeze, while heavy concentration of long orders between $77,300 and $78,000 risks a liquidation cascade if Bitcoin slips below $79,000.

This article is for informational purposes only and does not constitute investment advice.