Galaxy Digital dey warn say leverage trading risk dey rise
Galaxy Digital Q2 report show say crypto collateral loans don jump 27% from last quarter to $53.1 billion, na reach di highest level since early 2022. Recent drop for BTC price trigger contract liquidations wey pass $1 billion, show say leverage trading risk dey increase. Analysis also talk say USDC off-chain borrowing cost don dey climb steady since July, e dey make on-chain and off-chain dollar liquidity mismatch worse. Tight DeFi liquidity and more lending concentration dey add more pressure for market. Traders suppose dey watch leverage trading risk along stablecoin funding costs and liquidity issues, because these fit cause more volatility, margin calls, and liquidation. Dis vulnerability show how important e be to get strong risk management as crypto loan volume and lending concentration dey high.
Bearish
Di report dey yan say crypto loan volume don sharply rise and lending don concentrate, and together with over $1 billion wey don knack for recent BTC liquidations, e mean say leverage trading risk and market fragility don dey mount. Historically, when leverage and funding costs spike like during 2022 market crash, e dey cause margin calls to quicken and more people dey sell off. Tight DeFi liquidity plus wahala for on/off-chain funding fit trigger quick deleveraging and market wahala. For short term, traders fit face higher chance of liquidation and price movement. For long term, if liquidity palava and borrowing cost pressure continue, e fit kill market confidence and trading, meaning market fit dey bearish unless funding condition improvement show.