Bitcoin leverage ramps up as BTC's margin long-to-shorts ratio hits a record $2.5B high

cointelegraph.com:

Crypto traders' urge to create leverage positions with Bitcoin (BTC) appears irresistible to many people, but it's impossible to know if these traders are extreme risk-takers or savvy market makers hedging their positions.

The need to maintain hedges holds even if traders rely on leverage merely to reduce their counterparty exposure by maintaining a collateral deposit and the bulk of their position on cold wallets.Regardless of the reason for traders' use of leverage, currently there is a highly unusual imbalance in margin lending markets that favors BTC longs betting on a price increase.

Despite this, so far, the movement has been restricted on margin markets because the BTC futures markets remained relatively calm throughout 2023.Margin markets operate differently from futures contracts in two main areas.

Those are not derivatives contracts, meaning the trade happens on the same order book as regular spot trading and unlike futures contracts, the balance between margin longs and shorts is not always matched.For instance, after buying 20 Bitcoin using margin, one can literally withdraw the coins from the exchange.