The Hidden Driving Force Behind Funds and Leverage in Pullbacks

Pullbacks are often closely related to changes in the funding structure. During the upward phase, leverage and derivatives positions gradually accumulate. Once price fluctuations occur, chain liquidations can amplify the downward movement. This mechanism determines that pullbacks tend to come quickly and with concentrated magnitude.

Recent data shows that open interest in some high-leverage assets has significantly decreased, indicating that the market is actively deleveraging. Although this adjustment may bring short-term pressure, it helps reduce systemic risk and creates a more stable environment for subsequent market movements.

At the same time, the flow of stablecoins is also an important indicator for observing pullbacks. If funds are merely shifting from high-risk assets to stablecoins without large-scale outflows from the market, it suggests that overall liquidity remains intact; conversely, it warrants caution for deeper risks.

Understanding the interaction between funds and leverage helps investors avoid making impulsive decisions during emotional volatility.
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