Bitcoin's rise above $80,000 appears driven by short covering, not excessive leverage

Bitcoin climbed from around $62,000 to around $80,000 over the past week. The move appears to reflect short covering rather than excessive leverage. Short covering involves closing bearish positions. Fresh outright long positions do not appear to have driven the rally. The move was bitcoin's second-largest weekly gain of the past five years. Crypto-margined open interest is at a record low. Cash-backed collateral dominates. Futures open interest stood at around 587,584 BTC at the time of the report. Glassnode data put that level at its lowest in nearly five months. Open interest was 645,760 BTC on Aug. 14. Open interest measures the total number of active futures contracts. Measuring open interest in bitcoin terms removes the mechanical increase caused by bitcoin's higher dollar price.