The open contracts of alts soared to a historical high of $61.7 billion! After the altcoin season index broke 61, it quickly retreated, and the leverage risk warning was upgraded.

On August 22, the open interest (OI) of altcoin futures surged by $9.2 billion in a single day, reaching a total scale of $61.7 billion, setting a historical record. Meanwhile, the Altcoin season index rose to 61 (the first time testing this threshold since 2025), but quickly fell back to 56. Despite the explosive demand for leverage, capital rotation remains weak, with Bitcoin's dominance still holding at the 57% mark, indicating that this cycle is still led by BTC. Historical data shows that similar leverage bubbles have led to a 50% slump in altcoins in Q1 2025, and investors need to be wary of the risks of volatility cycles.

【Leverage Frenzy and Divergence of Capital Flow】

On-chain data shows significant divergence:

(Source: Glassnode)

• alts OI growth surpasses BTC: Increased by $40 billion since March (BTC increased by $30 billion during the same period)
• Capital rotation indicator stagnation: TOTAL2 (total market cap excluding BTC) is falling in sync with BTC, indicating a cooling of risk appetite.
• Ethereum leverage collapses first: Unsettled contract positions decreased by 4% within 24 hours (price drop of 3%), liquidation pressure spreads to mainstream coins.

This divergence between leveraged growth and capital inflow usually indicates that the market is in a "false prosperity" stage, which is particularly concerning for "contract traders" and the "leverage management" group.

[Historical Cycle Warning Signal]

The current market structure is very similar to that of January-February 2025:

• At that time, the altcoin index also quickly crashed after reaching 61.
• Bitcoin plummeted 18% this month, dragging the alts index down to 20
• Ethereum dropped to a low of $1440, with most altcoins falling over 60%.

This pullback has shown dangerous signs: Bitcoin's drop is controlled at 2.68%, but alts generally have a drop of over 5%, indicating that leveraged Closings are amplifying Fluctuation.

【Technical Indicators and Market Stress Testing】

Multiple data indicate that the market is under pressure:

• Weighted funding rate: Most altcoins maintain extreme values above 0.15%
• Futures Premium Index: Decreased from 0.12% to -0.03%, shifting to a bearish structure.
• Stablecoin inflow rate: USDT weekly net inflow decreased by 47%, with insufficient new funds.

For crypto users focusing on "alts season strategy" and "rotation arbitrage", it is recommended to closely monitor Bitcoin's 57% dominance support, as a breach could trigger a larger-scale deleveraging.

[Conclusion]

The altcoin market is facing the dual challenges of leverage bubbles and a lack of funds. Although the OI hitting a new high reflects the continued market enthusiasm, historical experience shows that leverage expansion without real capital inflow often ends with a violent clearing. Investors are advised to adopt a "low leverage + staggered profit-taking" strategy, focusing on allocating BTC/ETH and other anti-dip assets, and waiting for the rotation indicators to truly warm up. Continuous attention should be paid to the impact of the September Federal Reserve interest rate decision on market liquidity.