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Analysis: This rebound is “burning through the last drop of fuel,” and underlying spot liquidity is difficult to support leverage for lending.

MarsBitNews
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Mars Finance news: On July 16, CryptoQuant analyst Crazzyblockk released on-chain data showing that the leverage on current Bitcoin trading platforms is in a highly fragile state. Measured by the relationship between open interest and stablecoin reserves, the expansion speed of lending margins far exceeds the level that spot liquidity can absorb, and leverage deployment has entered the top 5% of historical extreme values. It is currently severely overheated and above the historical average. This means this rally is built on borrowing leverage that lacks underlying spot liquidity support, and traders are “burning the last drop of fuel.” The analyst noted that the market environment creates a dangerous psychological trap: surface-rising prices generate risk appetite, drawing retail investors into high-leverage long positions, but the depletion of underlying stablecoin reserves creates massive conditions that trigger a flight to safety. Smart money and market makers can see this top-heavy order book structure—when leverage deviates from the mean by this much yet lacks capital support, the price will be pulled down. The path of least resistance is to violently liquidate these overextended positions—deleveraging is not a probability question, but a mathematical inevitability to reset the indicators back to an equilibrium state. The analyst recommends cutting margin, protecting spot positions, and waiting for leverage to cool before looking for new entry points.
BTC-1.40%
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