Bitcoin’s recent weakness could extend further, with leverage piling up and capital rotating into Ethereum, according to a new report from K33 Research.
Vetle Lunde, K33’s Head of Research, highlighted that notional open interest in BTC perpetual futures has surged to a two-year high of over 310,000 BTC ($34 billion), with 41,600 BTC added in the past two months. A sharp weekend jump of 13,472 BTC pushed funding rates from 3% to nearly 11%, signaling aggressive long positioning despite stagnant price action.
“These conditions resemble leverage build-ups in 2023 and 2024 that ended in brutal liquidation cascades,” Lunde wrote, warning that long squeezes could be imminent. He advised traders to remain cautious until excess leverage is flushed out.
Adding pressure to Bitcoin is a “huge” rotation into Ethereum. A whale recently swapped 22,400 BTC for ETH on decentralized exchange Hyperunit, driving ETH to a record $4,956 and lifting the ETH/BTC ratio above 0.04 for the first time this year. The surge ended Ethereum’s 1,380-day drawdown and shifted momentum toward ETH, bolstered by ETF inflows and corporate treasury demand.
Historically, Ethereum all-time highs have coincided with broader crypto cycle peaks — as in 2017 and 2021, when ETH breakouts were followed by altcoin rallies and Bitcoin stagnation. However, BTC dominance remains relatively high at 58.6%, compared to sub-40% levels during prior cycle tops, suggesting the market has yet to enter full “altcoin froth” mode.
Institutional flows show a cautious stance. CME traders have trimmed BTC exposure, and options markets have turned defensive, with longer-dated skews entering positive territory for the first time since 2023. ETH futures, by contrast, are trading at steep premiums and outperforming BTC as demand consolidates around Ethereum.
The question now is whether this cycle repeats history — with ETH peaks marking the top of the broader market — or if Bitcoin can regain momentum without a cascading correction.
