As Bitcoin (BTC) dropped below the psychological support level of $70,000, dangerous overheating signals have been detected in the derivatives (futures) market. According to CoinDesk, while spot demand is shrinking, leverage (borrowed capital) investors are instead holding their ground by aggressively increasing their long (buy) positions, heightening concerns over a cascade of liquidations.

<strong>Record-High Open Interest (OI) and Funding Rates</strong> Open interest (OI) in the Bitcoin futures market recently soared to approximately 773,000 BTC. This figure approaches all-time highs, a level rarely observed only a handful of times in Bitcoin's history. Additionally, the current Bitcoin funding rate has surged to an annualized rate of around 10%.

<strong>Further Declines Could Trigger a 'Long Squeeze'</strong> The greatest risk lies in a further drop in price. If the downward trend continues as spot prices keep falling, the long positions that have been holding on while bearing high interest rates in the 10% range will face mass forced liquidations. Analysts warn that this could act as the catalyst for a 'Long Squeeze,' dragging prices down into a much deeper bear market in an instant.