Leverage: open interest and funding rates in plain English
Most of crypto's biggest single-day moves were not caused by news. They were caused by borrowed money being forced out of the market all at once. The leverage tile is how you see that pressure building before it releases.
Leverage, in one paragraph
Leverage means betting with borrowed money. A trader puts up $1,000 and controls a $10,000 position. If price moves 5 percent in their favor they make $500, half their stake. If it moves 5 percent against them they lose $500. If it moves 10 percent against them the exchange closes the position by force, because the borrowed money is no longer covered. That forced close is a liquidation, and a liquidation is a market order that pushes price further in the direction that caused it. Enough of them at once and you get a cascade.
The Board shows two numbers that measure how much of this is in the system.
Open interest
Open interest is the total value of leveraged positions that are open right now, added up across the major exchanges. It counts positions, not trades: a position opened today and still open tomorrow is still counted tomorrow.
Rising open interest means more borrowed money is entering the market. Falling open interest means positions are being closed, either voluntarily or by liquidation. A high number is not bullish or bearish by itself. It is fuel. It tells you a big move, in either direction, would have a lot to feed on.
Funding rates
Perpetual futures, the instrument most crypto leverage runs through, have no expiry date. To keep their price tied to the real spot price, exchanges make one side pay the other a small fee every few hours. That fee is the funding rate.
When funding is positive, traders betting on higher prices are paying traders betting on lower prices. That means the crowd is leaning long. When funding is negative, the shorts are paying, and the crowd is leaning short. The size of the rate tells you how hard the lean is. Ordinary is a small positive number. A large positive number means longs are crowded and paying dearly to stay in.
How to read the two together
Open interest rising while price is flat: pressure is building and has not picked a direction yet.
Open interest high and funding strongly positive: the market is crowded long. A modest drop can trigger liquidations that turn it into a large drop. This is the setup behind most of the sudden flushes you have seen.
Open interest high and funding negative during a rising market: shorts are crowded and being squeezed. Rallies in this state tend to run further than fundamentals alone would justify.
Open interest falling sharply: a flush just happened. Leverage has been cleared out, and the market is usually calmer for a while afterward.
What it does not tell you
Leverage tells you how much borrowed money is at risk, not which way price will go. A crowded long market can keep rising for weeks if real buyers keep arriving. The tile is a measure of fragility, not direction. Read it with the ETF and whale tiles, which show whether real supply and demand are backing the leveraged positions.
Where the data comes from
Open interest and funding rates come from the public derivatives tape of a major exchange, read at every site build. Figures from one venue move in step with the market as a whole, though the exact levels differ from venue to venue.