Bitcoin Holds Near $114K as Leverage Builds—A Double-Edged Sword
Alex Morgan
October 25, 2025
“Leverage is making the tape look calm, but the spring is coiling tighter,” said Michael Trent, head of digital assets at Apex Trading.
Price Action in Focus
Bitcoin traded in a narrow $1,800 band overnight, oscillating between $113,200 and $115,000 after a sharp climb earlier in the week. Spot desks described the mood as “orderly digestion” following Tuesday’s breakout above $110K, chronicled in our report on bitcoin’s CPI-fueled surge.
Ether slipped roughly 1.2% to $3,420 as traders rotated into yield-bearing altcoins linked to new ETF launches. Meanwhile, the bitcoin dominance ratio held near 55%, underscoring how capital remains anchored in the benchmark asset even as thematic narratives shift.
Leverage Metrics Heat Up
Aggregate bitcoin open interest across major futures venues climbed to $27.6 billion, the highest since March. Funding rates on perpetual swaps edged above 0.035% every eight hours on Binance and OKX, signaling that longs are paying a premium to maintain positions. Traders say basis trades are back in vogue, with delta-neutral funds capturing annualized yields north of 14%.
The leverage build mirrors the pattern that preceded recent liquidation episodes, raising the stakes for any unexpected volatility. Options desks report elevated demand for short-dated puts, suggesting sophisticated traders are hedging downside even as spot remains resilient.
Market Breadth Remains Mixed
Beyond bitcoin, large-cap performance was uneven. Solana gained 3% on ETF enthusiasm, while Litecoin and Hedera climbed ahead of their upcoming listings. Conversely, gaming and metaverse tokens lagged, and DeFi majors such as Aave and Uniswap fell between 1% and 2% amid profit-taking.
Market makers said liquidity improved for select altcoins tied to new ETFs, yet broader breadth measures—like the ratio of advancing to declining tokens on major exchanges—remained below 0.8, reinforcing the narrative of a rotation-driven market.
Catalysts to Watch
Investors are watching for fresh flow data from spot bitcoin ETFs, which posted sizeable creations earlier this week. Derivatives traders will dissect Friday’s quarterly expiration calendar, while macro strategists await next week’s U.S. GDP revision and the Bank of Japan policy meeting.
Funding desks added that stablecoin issuance trends and on-chain exchange reserves remain key gauges of whether this consolidation resolves higher or slips into a deeper correction.
Managing the Downside
With leverage elevated, traders are tightening stop-loss levels and scaling into hedges. Several quant funds highlighted a rise in cross-exchange basis discrepancies, a sign that arbitrage capital is nearing saturation. Should volatility spike, cascading liquidations could quickly knock bitcoin back toward $107K support.
For now, liquidity providers say they are prepared to absorb moderate selling, but they warn that a shock—whether from macro surprises or negative ETF headlines—could flip sentiment fast. Until the market sees either a decisive breakout or a cleansing flush, patience may prove as important as conviction.