Leveraged positions in the futures market of the privacy-focused altcoin Monero have once again approached dangerous levels. According to market data, the total open interest in XMR futures has exceeded $300 million, nearing the record high of approximately $320 million seen in January.
Open interest represents the total amount of futures contracts that investors have opened but not yet closed. An increase in this value indicates that more leveraged capital is entering the market. The amount of open interest in Monero, in token terms, has also reached a five-week high of approximately 515,730 XMR. This figure was around 400,000 XMR just a week ago.
It is noteworthy that a similar pattern was observed in January. At that time, Monero fell from approximately $790 to below $300, losing about 66% of its value. The forced closing of long positions during the decline was one of the factors that amplified the selling pressure.
However, it would be incorrect to conclude that past price movements will repeat themselves. An increase in open positions alone does not indicate direction; investors may open futures contracts expecting both price increases and decreases. Nevertheless, high leverage increases the likelihood of a large sell-off regardless of the price’s direction.
With the XMR price rising back above $600, the dollar value of positions has also increased. A sudden pullback could force the liquidation of long positions, while an unexpected rise could force the liquidation of short positions. Therefore, it is important for investors to closely monitor not only the spot price but also open interest, funding rate, and liquidation data.
*This is not investment advice.
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