Coinalyze data shows that on September 6, the total open interest in altcoin perpetual contracts surpassed that of Bitcoin for the first time since December 2024. This shift coincides with strength in Zcash and the broader altcoin market, indicating increased leverage participation by capital.
Bitcoin remains the single largest derivatives market.
As of September 7, the total open interest in Bitcoin was approximately $25 billion, with perpetual contracts accounting for about $23.9 billion and term contracts totaling around $1.2 billion. Open interest represents the total value of outstanding contracts that have not yet been closed or settled, and does not by itself indicate whether the overall market is bullish or bearish.
This "overtaking" refers to the combined total of altcoin perpetual contracts surpassing Bitcoin, not a single altcoin individually surpassing Bitcoin. From a market structure perspective, Bitcoin remains the largest single cryptocurrency derivatives market, while the altcoin data aggregates figures from Ethereum, Solana, XRP, BNB, Zcash, and numerous other lower-market-cap tokens.
Zcash drives increased interest in leveraged trading
Zcash was one of the most prominent assets during this expansion. In early September, the open interest in ZEC futures rose to approximately $2.3 to $2.4 billion. On September 4, the price surged about 20% in a single day, briefly surpassing $1,000, with an intraday high near $1,023.
This rally triggered the liquidation of approximately $36.6 million in leveraged positions, of which about $34.5 million were short positions. By September 7, ZEC rose further to around $1,192, increasing by another 11% on the day, with intraday trading ranging between $1,074 and $1,249.
Previously, crypto.news reported that Zcash became the first privacy coin to have a U.S. spot ETF. Grayscale converted its Zcash Trust into the ZCSH ETF listed on NYSE Arca in August. At launch, the fund had assets under management of approximately $304 million, later increasing to over $414 million.
Spot recovery coexists with liquidation risk
Beyond derivatives, the spot market is also recovering. According to the report, data shows that the total market capitalization of altcoins, excluding the top ten cryptocurrencies, surpassed $200 billion in early September, an increase of over 10% from the beginning of the month. This indicates that while derivative activity is rising, spot valuations are also increasing.
However, an increase in open interest in USD terms does not necessarily mean an increase in new positions. If the underlying price rises, the USD value of open interest can expand passively even if the number of contracts remains unchanged. For example, with ZEC, if the same quantity of tokens remains in futures positions and the price rises from $800 to $1,000, the corresponding open interest will automatically increase.
The report also noted that high open interest is only more dangerous when leverage expands faster than market liquidity. If prices suddenly reverse, exchanges may be forced to liquidate positions more rapidly, amplifying the existing trend. Short covering can push prices higher, while long liquidations can exacerbate declines.
Additional information: The article notes that the original report stated that “liquidation risk tends to accelerate when open interest approaches 4.42% of total market capitalization,” but did not provide the original research or methodological details; therefore, this threshold is better regarded as an unverified estimate.