Altcoin Leverage Hits Multi-Month High Ahead of Fed Interest Rate Decision
Traders have increased altcoin leverage to a multi-month high, pushing altcoin open interest above $10 billion as they prepare for the Federal Reserve’s upcoming interest rate decision. Data from major exchanges show total crypto leverage rose by 15% in the past week. Funding rates for key tokens such as SOL, ADA and DOT turned positive, signalling a bullish tilt in the crypto market. Market participants are bracing for Fed signals on rate hikes or pauses, which could trigger sharp swings in altcoin prices. Analysts warn that elevated funding rates and leverage levels heighten the risk of liquidations if the Fed adopts a more hawkish stance. However, a dovish outcome could extend the current altcoin rally, mirroring the post-pause surges seen earlier this year. Traders are advised to monitor funding rates, open interest trends and Fed commentary closely for potential trading opportunities and risk management.
Bullish
Surging altcoin leverage and open interest reflect strong trader appetite ahead of the Fed decision, indicating bullish sentiment conditional on a dovish outcome. Historically, leverage spikes have preceded sharp price moves, as seen when the Fed paused rate hikes in April; altcoins rallied on renewed risk-on behaviour. In the short term, high funding rates may fuel further gains but also raise liquidation risks if the Fed adopts a hawkish tone, leading to rapid deleveraging. Over the longer term, sustained accommodative policy could support continued altcoin rallies, while tightening would likely trigger market-wide corrections. Traders should watch Fed signals, funding rates and open interest to gauge market direction.