Analysis: Ethereum's new high highlights a shift in market momentum, while the surge in market leverage raises concerns about a bull tail

ChainCatcher news, K33 research director Vetle Lunde analyzed that a long-term holder exchanged 22,400 BTC for ETH, driving Ethereum to a historic high last week, reflecting a shift in market momentum. However, Bitcoin's recent weak performance may continue, with rising leverage and funds rotating into Ethereum putting it under short-term pressure.

Data shows that the nominal open interest of Bitcoin perpetual contracts has risen to a two-year high, exceeding 310,000 BTC (approximately $34 billion), with an increase of 41,607 BTC over the past two months, including a surge of 13,472 BTC last weekend, which may signal a potential turning point. The annualized funding rate for Bitcoin jumped from 3% to nearly 11%, indicating that bullish positions are becoming increasingly aggressive during the price consolidation period.

Lunde believes that the current situation is similar to the leverage accumulation periods of summer 2023 and 2024, both of which triggered severe liquidations in August. This peak in open interest occurred later in the month, suggesting that the market may enter a longer consolidation phase, potentially trapping bottom-fishing funds.

Lunde warned: "The risk of short-term long position squeezes is high, and it is advisable to maintain conservative positions until the market clears excess leverage." He pointed out that historically, Ethereum reaching new highs often signals a peak for the overall crypto market, with similar patterns observed in the 2017 and 2021 cycles: Ethereum breakout, altcoin surges, and Bitcoin stagnating due to weakened demand, raising concerns about the end of the bull market.

Currently, Bitcoin's market dominance remains at 58.6%, well above the previous peak of less than 40%. As Ethereum establishes relative strength, traders are closely watching whether this cycle will repeat historical patterns.