Crypto Leverage Reaches $53.1 Billion, Signs of Market Stress Emerge
Market Summary
Leverage in crypto markets is nearing bull-market levels, despite a recent pullback. Key points include:
- Galaxy Research reports a 27% increase in crypto-collateralized loans in Q2, totaling $53.1 billion.
- Bitcoin fell from $124,000 to $118,000, causing over $1 billion in liquidations, marking the largest long wipeout since early August.
- Ethereum's borrowing rates surged as withdrawals on Aave increased, leading to a record 13-day exit queue for staked ETH.
- USDC borrowing costs are rising off-chain, contributing to a widening gap between on-chain and off-chain dollar markets.
- Strategists remain bullish due to institutional demand and ETF inflows, but stress points in the system have increased.
- The recent $1 billion liquidation serves as a warning about the risks of high leverage.
Market Movers
BTC: Trading at $118,061.51, up 0.44%, with reduced volatility ahead of Jerome Powell’s speech.
ETH: Trading at $4,524.10, up 2.13%, with $3.8 billion in Ether queued for unstaking and a potential 15-day wait.
Gold: Trading at $3,332.95, down 0.11%, amid inflation concerns impacting Fed rate-cut expectations.