Fuel and Rockets: The engine of this altcoin bull run surprisingly is Perptual Futures?

The bull run in encryption in 2025 may (already) be coming, but the way its engine roars is vastly different from before. If you are still fixated on spot trading volume to gauge market heat, you may only be seeing the tip of the iceberg. The true protagonist of this bull run is the Perptual Futures Perps — a massive, high-leverage PVP arena driven by fierce battles between buyers and sellers. The liquidity, narrative, and wealth effect here are redefining the entire market in unprecedented ways.

Why has liquidity become unprecedentedly concentrated in the contract market, and how does a numerical case reveal how "short liquidations" become rocket fuel, driving the core mechanism of spiraling asset price increases.

Disclaimer: Everything is fabricated, any resemblance is purely coincidental.

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1. Data Pivot: When the "tail" begins to wag the "dog"

The phenomenon is the best proof of the theory. We first verify an astonishing fact through data: the volume of Perptual Futures has completely crushed the spot market.

• Volume Comparison: According to data from platforms such as TokenInsight in the second quarter of 2025, the trading volume of mainstream exchanges' crypto derivatives (primarily Perptual Futures) is usually 10 to 15 times that of spot trading volume. This means that when the spot market has a trading volume of $10 billion, the trading volume in the futures market may have reached $100 billion to $150 billion.
• Open Interest: By observing the open interest of mainstream cryptocurrencies such as BTC and ETH, as well as popular new coins, we can see that their scale far exceeds the spot inventory of the corresponding cryptocurrencies on exchanges. This indicates that the vast majority of market participants have their risk exposure and capital deployed in the derivatives market.
• Funding Rate: During most of this bull run, the funding rate has remained positive and high for a long time. This has attracted a large number of "arbitrageurs" to enter the market, who earn stable funding rates through the strategy of "shorting perpetual futures + buying an equivalent amount of spot". This part of the operation further drains liquidity from the spot market and locks it into hedge positions.

Conclusion: The data clearly shows that the market's capital, attention, and focus of speculation have undergone a structural shift. Perpetual Futures are no longer an accessory to Spot, but have instead become the core battlefield driving short-term price fluctuations. The market has shifted from "Spot driving contracts" to "contract speculation forcing Spot."

"At this moment, spot has surprisingly become an 'accessory'."

2. Core Mechanism Revealed: How is the “Short Squeeze Rocket” Launched?

The "weird phenomenon" in the market - the price increase did not start with spot buying, but was driven by the liquidation on the contract side. This is the core mechanism of this "Perps bull run."

Let us explain this process with a simplified numerical example.

Example: New Coin "RocketCoin" (RKT)

• Background setting:
• RKT is a popular new project with an extremely low initial circulation of only 1 million tokens (1/10) available in the market. (Assuming the total circulation is 10 million tokens)
• The exchange has launched RKT's U-based Perptual Futures.
• Current spot price: $10.
• Due to the consensus that "new coins should be shorted," the futures market has accumulated a large number of short positions. Assuming there are $10 million worth of short positions (300,000 RKT) waiting to be liquidated between $11 and $15.

Launch Process:

1. Initial Ignition: A certain whale or project party invests a small amount of funds in the Spot market, for example, buying 20,000 RKT for $200,000, forcibly pushing the Spot price from $10 to $11. The Spot market has low liquidity (shallow pool), making the cost of raising prices extremely low.
2. First-stage rocket detachment (first round of liquidation): The RKT price hits $11, and the first batch of short positions with stop losses set at this price level are forcibly liquidated (i.e., margin call). Assuming this batch of positions is worth 1 million dollars.

• Liquidation Mechanism: The operation of "closing a short position" is to "buy". The liquidation engine needs to immediately buy RKT contracts worth $1,000,000 in the market.
• Market Maker Hedging: Market makers providing liquidity to the clearing engine will immediately buy an equivalent amount of RKT spot in the spot market to hedge against their own naked short risk while selling contracts.
• Price feedback: This spot buy order from the market maker further pushed up the already thin spot price, for instance, from 11 to 12. market makers buying spot to hedge

2. Entering the orbit: This cycle forms a positive clearing spiral. Each layer of short liquidations becomes fuel for the next round of price increases, pushing the price of RKT from $11 all the way to $15 or even higher. In this process, the initial "ignition" fund of $200,000 leveraged passive buying of millions or even tens of millions of dollars.

Conclusion: This is the essence of the simple version of "Perps bull run": leveraging extremely low spot liquidity as a pivot point, creating a counterparty in the contract market (large short positions), and ultimately using the "liquidation" mechanism as the engine to drive prices to achieve seemingly "unfounded" increases. The rise in spot prices is more like a result and manifestation of this process rather than the cause. (Clearly, this operation is not as smooth in practice.)

3. Why is it "this version"? Timing, location, and human factors.

This phenomenon was not so obvious in previous cycles and is the result of multiple factors working together:

1. Timing (Project Party Strategy): The projects in this cycle generally adopt the "Low float, High FDV" issuance model. This creates a perfect "necessary and sufficient condition" for artificially controlling the spot trading market and leveraging the high leverage contract market.
2. Geographical advantages (market infrastructure): The perpetual futures product itself has matured significantly after years of development. The smooth trading experience, deep liquidity, comprehensive API, and market maker system enable it to handle massive amounts of capital and complex games.
3. People and (market consensus and narrative):

• The paradigm of "empty new coins": This rendered "consensus" actively generates a large amount of "fuel" for the market.
• The Myth of Getting Rich Quick: The promotion of contract masters achieving returns of hundreds or thousands of times continues to attract players who are eager for high-risk, high-reward opportunities. In particular, the extreme trading operations of various whales on Hyperliquid have provided ample imaginative space for this "get rich (negative)" narrative.
• The allure of mechanisms: Complex strategies such as funding rate arbitrage and liquidation grabbing have transformed the market from a simple long-short showdown into a multi-role, multi-dimensional financial game, further locking in liquidity.

Conclusion

Everyone, don't take it seriously, this round is a "bull run of Perps," merely a "nickname" for the deep structural changes in the market. While it signifies a story of wealth growth, it is more about narrating a complex financial fable regarding leverage, liquidity, mechanisms, and the game of human nature, rather than simple value discovery.

In this version, Spot has become the ultimate embodiment of hedging and pricing, while Perptual Futures is the core vehicle that integrates narrative, capital, and mechanisms, truly defining the pulse of the market. Understanding and adapting to this game rule of "using your liquidation as fuel" is key to navigating this cycle.

Finance or gaming is like this, PVP will always bring new experiences.

May we always hold a heart of reverence for the market.