- Analytics platform Santiment reported rising open interest in bitcoin, Ethereum and Solana as the crypto market recovered.
- Santiment warned that greater use of leverage could amplify a sell-off and trigger cascading liquidations if the market reverses.
- The platform said peaks in bullish and bearish retail sentiment coincided with local reversals in bitcoin’s price.
Analytics platform Santiment reported that open interest in bitcoin, Ethereum and Solana increased as the crypto market recovered. The rise indicates greater market activity and risk-taking, but Santiment said higher leverage could increase volatility and the risk of large-scale liquidations during a reversal.
The value of outstanding derivatives positions stands at about $23.4 billion for bitcoin, $15.5 billion for Ethereum and $2.7 billion for Solana, according to the platform. Santiment’s data showed open interest rising alongside prices as traders returned capital to the market and used leverage more actively.
Santiment said a sudden reversal could force traders to close leveraged positions, potentially triggering cascading liquidations and intensifying a sell-off.
Ethereum has recorded the most pronounced and consistent growth in open interest since August, according to Santiment. Solana’s open interest has been more volatile, while bitcoin’s remains well below its spring peaks.
Analysts also noted increased speculative activity around altcoins. In their view, bitcoin is acting as an “anchor,” while other assets have more room to rise.
Extreme sentiment
In a separate analysis, Santiment examined the relationship between retail traders’ social-media sentiment and bitcoin’s price movements.
On September 20, X, Reddit, Telegram and other social networks recorded the largest spike in bullish sentiment over the preceding month, according to the platform. Bitcoin’s price then began to decline.
By contrast, bearish comments peaked on October 15, when bitcoin was near local lows. The cryptocurrency subsequently resumed its climb.
Santiment said extreme optimism or fear often emerges with a delay. Because most public comments come from retail market participants, peaks in crowd sentiment can serve as contrarian signals when assessing potential entry points, according to the platform.
Santiment recommended tracking periods when sentiment becomes extremely bullish or bearish because they may coincide with local market reversals.
Other experts previously said bitcoin was forming a bottom amid accumulation by large holders, although spot demand remained weak.
Source: Incrypted
