Unit 3 · Level 3 · Derivatives data
Leverage check
Funding shows which side is crowded and paying. Open interest shows how much leverage is stacked. Liquidation maps guess where it breaks, and options skew prices the crowd's hopes and fears. Together they answer one question: how much borrowed conviction is in this market, and which way does it lean? Review time.
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What you get asked
Price is rising AND open interest is rising sharply. The classic reading is…
Fresh OI on a rally means borrowed conviction is stacking up. The advance has fuel, and also a growing pool of future forced sellers.
Match each derivatives gauge to the question it answers
Four instruments, one dashboard: crowd direction, crowd size, breaking points, and priced-in fear or greed.
Deeply negative funding plus falling open interest after a crash suggests the ___ squeeze fuel is building on the short side.
Crowded, paying shorts after a washout are tomorrow's forced buyers. Several of crypto's sharpest recoveries started exactly there.
Why do crypto crashes often move in violent 'staircase' legs?
Cascading liquidations are the physics behind the pattern: forced orders begetting forced orders until the over-leveraged zone is cleared.
The honest, recurring theme across ALL derivatives signals is…
Derivatives data tells you how flammable the room is, never the hour of the spark. Position for fragility; don't schedule it. 🐜
The rest of this unit
Funding, open interest, liquidations, options: read the leverage that moves crypto prices.