Bitcoin has been reaching new all-time highs, surpassing $97,000, largely due to optimism following Donald Trump’s political victory. This surge is placing Bitcoin close to the $100,000 milestone and could push its market capitalization beyond $2 trillion. The derivatives market is fueling this rally, with Bitcoin’s Open Interest climbing to $63 billion, a 147% increase in market leverage compared to its 2021 peak.
However, this high leverage in derivatives is making the market more vulnerable to sharp price swings. Bitcoin’s price fluctuations have already triggered industry-wide liquidations exceeding $450 million in the past 24 hours, with 60% of these coming from short positions. As Bitcoin approaches the six-figure milestone, market participants should be cautious due to increased volatility.