Bitcoin Leverage Trading Surges as Prices Climb

Bitcoin (BTC) price is moving towards its all-time high levels, and as a result, there’s an increase in demand for leveraged trades. Leveraged futures-based exchange-traded funds (ETFs) like VolatilityShares’ 2x Bitcoin Strategy ETF (BITX) are experiencing entries comparable to those of spot Bitcoin ETFs. Data from K33 Research indicates that the fund has attracted $630 million in monthly net inflows, placing it just behind giants like BlackRock and Fidelity in terms of inflow volume.

Bitcoin Futures Trading

Bitcoin ETFs based on futures currently hold a record equivalent risk of 83,300 tokens, while leveraged Bitcoin ETFs account for about 25% of the open positions in one of the largest markets for crypto derivatives, the CME. K33 Research reports that futures premiums on the platform have risen to around 20% in the highest open position environment to date. A new report published on Tuesday highlights a significant increase in flows into 2x leveraged BTC ETFs, indicating a substantial demand for leveraged long-term exposure to BTC.

This situation aligns with the observed increased appetite for risk in BTC derivatives. According to K33 data, VolatilityShares’ 2x fund now holds an equivalent risk of 36,025 Bitcoin tokens, more than doubling its managed cryptocurrency in the first 11 days of March. The growing interest in such funds has further encouraged the launch of many new offerings. ProShares plans to launch five leveraged long and short BTC ETFs next month to meet rising market demand, while Valkyrie recently introduced its 2x leveraged product.

Bitcoin Funding Rates

As investors flock to take advantage of the ongoing bull run in the crypto market, the demand for leveraged trades has become evident. US-based institutions tend to prefer regulated offerings like crypto futures on the CME and traditional asset managers’ spot ETFs. Funding rates for Bitcoin perpetual futures, a critical indicator of leverage in the crypto market, remain quite high on major offshore exchanges. The leading crypto options trading platform Deribit also witnessed record levels of open positions and a significant increase in bullish positions on Bitcoin.