Bitcoin drops below $66k, with over 250k traders liquidated for $1.6 billion, but the open interest in coin-margined contracts has risen against the trend to 784.4k BTC, approaching a record high.

This is not just a simple long-short disagreement. When spot ETFs have experienced 11 consecutive days of net outflows totaling $3.5 billion, and Strategy sold BTC for the first time in four years, what does the record high in coin-margined positions signify?
The margin for coin-margined contracts is BTC itself, not stablecoins. The record high in open interest indicates that many traders, during the sharp decline, not only did not close their positions but actually added more Bitcoin as collateral. This is not bullishness but extreme confidence in the direction—whether the longs are stubbornly holding or the shorts are increasing their bets, both are using BTC as a wager.
Historical experience shows that extremely high levels of coin-margined open interest often correspond to key tops or bottoms. Similar signals appeared at the 2021 bull market peak and the 2022 bear market bottom. The current environment is closer to the latter: the fear index has fallen to 23, but leverage has not been unwound—instead, it is accumulating.
The risk is that if Bitcoin continues to decline, high-leverage positions will face a chain of liquidations. The liquidation mechanism for coin-margined contracts will directly sell BTC, intensifying selling pressure. If longs are forced to close, the BTC released will instead become ammunition for the shorts.
The market is pricing in an extreme scenario: either a rebound after a short-term bottom is confirmed, or the final accumulation before leverage collapses. In either case, volatility will be amplified.
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