Darkfost
Leverage unwind continues
It’s important to keep an eye on the derivatives market, as it currently represents between 70% and 80% of total trading volume depending on the period. When the market is heavily driven by leverage, it’s never sustainable, and the resulting liquidations can often trigger sharp volatility. Since the October 10 event, the market has entered a deleveraging phase. ❌ Liquidations continue to flush out excess risk, and leverage usage is gradually cooling down. Open interest has decreased by 21% over the last three months (90d change), meaning the number of leveraged positions is significantly dropping. During the corrections of September 2024 and April 2025, we saw decreases of around -24% and -29%. 👉 We’re now approaching similar levels to those previous patterns. In bullish market phases, these periods often precede trend reversals, helping to clean up the market and allow it to rebuild on healthier foundations. First the pain, then higher...