• Glassnode found fewer than 5% of altcoins with funding above 0.01% on Oct 20

• The share of altcoins with positive funding was near 25% in late September

• Price-adjusted altcoin open interest is down only about 5% from its October peak

Funding Cools, Leverage Doesn't

Funding rates on altcoin perpetual futures have sunk to the bottom of their two-year range, yet the leverage built up through October has barely left the market. On-chain analytics firm Glassnode's weekly report, published Thursday (Oct 22), found that as of Oct 20 fewer than 5% of altcoins carried a 7-day average funding rate above the 0.01% neutral baseline. That share stood near 25% in late September, so the proportion has fallen by more than 20 percentage points in under three weeks, and it now sits close to the lowest readings observed in the past two years. A funding rate is the periodic settlement cost exchanged between long and short holders on perpetual contracts: when it is positive, longs pay shorts, and elevated funding is read as a sign of strong demand for leveraged upside bets. Its collapse, then, shows that demand for fresh aggressive long entries, the kind often driven by FOMO during rallies, has thinned out considerably. Open interest tells a different story. Glassnode strips price effects from the figure, and that adjusted measure of altcoin futures open interest is down only about 5% from its October peak. Long-side crowding has eased, but the leveraged positions themselves have not been meaningfully unwound. The weekend underscored the correction underway: the median altcoin lost roughly 4%, the steepest weekend decline since May, while the altcoin leverage-heat gauge also pulled back from its 7-day peak and exited the risk zone.

40% of Large Caps Near Year-High Leverage

The sharper figure concerns what did not unwind. More than 40% of large-cap altcoins still run leverage close to their year-to-date highs, according to the same report. Among mid-cap altcoins, the share of coins operating at elevated leverage reached its highest reading of the year. Even after the recent price reset, risk exposure in parts of the market has therefore not come down in step with sentiment. Glassnode's warning is mechanical rather than rhetorical: if fresh selling pressure lands, long positions opened in anticipation of further upside could be forcibly closed in sequence, and that chain of forced closures would widen the drawdown. Market breadth backs the concern. CoinMarketCap's Altcoin Season Index printed 59 on Thursday, one point below the prior day and far under the 75 threshold typically used to declare an altcoin season. Bitcoin's trajectory remains the outside variable for altcoin risk. Glassnode identifies $80,000 to $81,500 as the primary support zone for BTC, with sell orders and expected futures liquidations clustered between roughly $85,000 and $87,500. Its conclusion: the market still carries considerable leverage, and a renewed rise in funding would be the earliest signal that a new round of one-sided positioning is forming.

A Slow Deleverage

Our reading of the two prints is that the market is cooling from within rather than de-risking. When funding normalizes while open interest stays near its highs, the crowd that had been paying the funding has stepped back, but the borrowed positions remain on the books, waiting for a move to close them. That leaves the setup asymmetric: a quiet tape resolves benignly, while any further leg lower meets clusters of longs sitting near their liquidation thresholds. The long side is the lighter side by funding, since it no longer pays a premium, yet it is still the heavier side by outstanding exposure. Any rebound in funding, not the headline price alone, is the tell we would watch for positioning rebuilding.