Crypto-margined Bitcoin futures now make up about 12% of open interest across all exchanges, down from nearly 100% in 2019 and 2020. The shift toward dollar-backed collateral coincided with a short squeeze that wiped out $570.08 million in positions in 24 hours, but the two trends are not the same story.
Bitcoin traders have largely abandoned crypto as collateral for their futures positions. Crypto-margined contracts — bets backed by Bitcoin itself rather than a stablecoin — now account for about 12% of open interest, according to Glassnode's long-run metric. For most of the last decade, a Bitcoin futures position was almost always margined in BTC.
Dollar collateral protects against margin calls
A crypto-margined position is collateralized in the asset being traded, so a price drop shrinks the buffer at the exact moment the trade moves against the holder. Stablecoin-margined positions instead sit in dollars, so the collateral keeps its value while the trade swings. Traders have simply chosen the steadier float.
The move mirrors a broader maturing of the derivatives market. Coinbase opened U.K. derivatives trading through Hyperliquid with up to 50x leverage this month. Bitcoin ETFs drew $854 million over five days as rate-hike bets faded, and Strategy trimmed its own Bitcoin stack — all signs of institutional flow that tends to settle in dollars rather than coins.
Shorts take the brunt of a squeeze
None of this cooled spot demand. Bitcoin rebounded from around $57,000 to a weekly close near $79,175, up about 1.88% on the day, after months of low-volatility drift between $60,000 and $68,000.
The 24-hour liquidations show a textbook short squeeze: $570.08 million wiped out, with shorts hit harder at $329.60 million versus $240.48 million in longs. Bitcoin's $295.41 million slice was the largest, and a $103.54 million BTC position on Bitget was the single biggest blowup, per CoinGlass data.
But the squeeze and the collateral shift are not the same story, even if both describe the current state of the crypto market. Stablecoin margin has been the dominant structure for years, with dollar collateral steadily displacing crypto as the backing for leveraged bets throughout that stretch.
Leverage is leverage no matter what backs it — dollar margin didn't cause this week's liquidations, and it won't prevent the next ones. Based on this data alone, the Bitcoin squeeze may not be over.
Source: Decrypt
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