Leverage Drives Bitcoin Toward $66K: Thin Spot Volume a Cause for Concern

Bitcoin's surge past $66,000 may not be sustainable due to thin spot volume and high leverage. According to CryptoQuant, the price gain is primarily driven by derivatives traders amplifying volatility rather than genuine spot demand.

CryptoQuant analyst Sunny Mom notes that open interest jumped from $21.2 billion to a fresh high of $23 billion as price rose, indicating new leveraged bets rather than short covering alone. Spot volume has remained in a cooling phase since April, which is a trend that points to derivatives traders driving the market.

The price gain was initially fueled by a bearish squeeze on July 18 and 19, where funding rates briefly turned negative as traders got squeezed out of their positions. However, this squeeze only lit the spark for the rebound toward $66,000, rather than indicating strong underlying demand.