Bitcoin leverage rises again: analyst warns of further decline

Leverage on the Bitcoin market is increasing again, and according to analyst joao_wedson, that is not a positive sign. After weeks of deleveraging, traders are again loading up their positions with borrowed money, while the Bitcoin price is currently hovering around $63K, a rise of 1.3% in the past 24 hours.

Bitcoin is available at OKX and Bybit.

Traders reload leverage after deleveraging event

According to Alphractal’s Leverage Pressure Zone indicator, Bitcoin is currently in the ‘slight leverage’ zone. That means the market is not yet in dangerous territory, but the pressure is increasing. After the deleveraging event of recent weeks, traders are thus picking up the levers again, probably in the belief that the bottom has already been reached.

Joao_wedson states that this could continue for a few more days before leverage becomes truly high. Periods of aggressive leverage are, according to him, bad for the market because they signal that many liquidations are lurking. It was earlier shown that Bitcoin and altcoins are flowing en masse to exchanges, which is also hardly a sign of calm.

Analyst waits for extreme deleveraging zones for entry point

The analyst is clear about his expectation: if leverage keeps rising, he does not believe in a price rally but rather in further downward movement. He indicates that he is still waiting for the blue and purple zones in the indicator, which represent extreme deleveraging events. Historically, those zones offer better conditions to take a position with more confidence.

This fits into a broader picture of caution in the market. For example, research shows that active Bitcoin investors are sitting on an average loss of 20%, while the Bitcoin realised P/L ratio has also reached its lowest level in 43 months. According to joao_wedson, the best strategy at the moment is simply to wait and keep an eye on the data. Patience is, in his own words, the key to success.