Bitcoin leverage hits yearly high, yet THESE risks could derail BTC’s rally

• Bitcoin’s market leverage hit a yearly excessive, signaling large danger urge for food and ‘greed.’
• Can bulls maintain momentum with $1.2 trillion in Unrealized Revenue?

Bitcoin’s [BTC] stayed simply 4% under its all-time excessive of $112K, but speculative exercise surged to yearly extremes.

The most recent knowledge pointed to a pointy uptick in risk-on habits, even because the market held its breath close to key resistance.

Bitcoin leverage tops the yearly vary

In line with CryptoQuant, BTC’s Estimated Leverage Ratio throughout all exchanges jumped to 0.27, the best studying previously 12 months.

Supply: CryptoQuant

Whereas this confirmed an aggressive danger urge for food and a bullish outlook amongst merchants, it additionally has a caveat: Liquidation cascades. With excessive leverage or borrowed cash in buying and selling, wild worth swings can wipe out positions in a flash. 

Is the market overheated? Not but!

Regardless of the excessive leverage, the market was not frothy or overheated sufficient to warrant panic, per Funding Price data.

CoinGlass knowledge confirmed BTC’s Funding Price hovering round 2% APR, a far cry from the overheated 50%+ ranges seen in late 2024.

Supply: CoinGlass

Briefly, the present leverage ranges are nonetheless wholesome for BTC to push larger, assuming different elements stay constructive. 

In the meantime, in case of a liquidation hunt, the principle key ranges to look at within the close to time period have been $103K and $111K. These have been main liquidity swimming pools and potential worth magnets.

In reality, about $8 billion price of leveraged bulls round $103K could possibly be in danger if the temporary correction faucets the extent. 

Supply: CoinGlass

Revenue strain builds

One other potential sell-side strain for bulls to contemplate is the excessive degree of Unrealized Revenue on the present BTC worth.

In line with Glassnode, the present profitability rivaled This autumn 2024 ranges -A danger issue if holders start locking positive aspects. 

“The whole unrealized revenue stands at an estimated $1.2T, underscoring the substantial worth appreciation skilled by Bitcoin buyers, but in addition the motivation for potential sell-side strain which will emerge if sentiment shifts.”

Supply: Glassnode

Different extra short-term macro headwinds embody the Trump tariff deadline on the ninth of July and the just lately handed reconciliation invoice. 

Notably, Coinbase analysts projected that the U.S. Treasury might borrow cash after the invoice raised the U.S. debt restrict to $5 trillion. 

Such borrowing would drain the U.S. greenback liquidity and negatively influence risk-on property like BTC.

With the present ‘greed degree’ available in the market, this soured sentiment might speed up the profit-taking situation shared by Glassnode.