Gold is overheating, while leverage in the US hits record highs: should we expect a crisis for Bitcoin?
Financial markets are sending alarming signals that directly affect the crypto sphere as well. An analysis of the current situation reveals two key risk factors: gold overheating and a record level of leverage on US exchanges. Together, these phenomena create an extremely fragile foundation for risky assets, including Bitcoin (BTC).
Gold Loses Its "Safe Haven" Status
Gold, traditionally considered a safe-haven asset, is currently exhibiting anomalous behavior. For the first time since 2007, the 180-day volatility of the precious metal is trading at a 2.3x premium to the volatility of the S&P 500 index. This transforms gold from a refuge into a speculative instrument. In February, the price of gold peaked at around $5,500 per ounce, a 40-year high relative to the 60-month moving average. After a correction of ~30%, the metal bounced off support at $4,000, but the overall picture appears overheated.
The rise in yields on 30-year US Treasury bonds to nearly 5.2% (a high since 2007) creates additional pressure. In such an environment, gold finds itself at a disadvantage compared to stocks and debt instruments, as it generates no income. Historically, such anomalies have preceded serious economic upheavals.
Record Leverage: Market on the Brink
An even more alarming signal is the record volume of leveraged speculation in US markets. Assets under management of US leveraged and inverse ETFs have reached $208 billion. Considering double and triple leverage, the real volume of positions exceeds $460 billion. The increase since the beginning of April amounts to about $200 billion. The lion's share falls on triple-leveraged funds ($320 billion), followed by double-leveraged funds ($171 billion). Positioning has become extremely one-sided: inverse funds, which profit from declines, account for only $27 billion. For comparison, during the bear market of 2022, the total exposure of such funds was only a fraction of current levels.
Both of these observations point to one thing: markets are overloaded with bullish bets, and safe-haven assets are losing their footing. In such an environment, any shift in sentiment could trigger a chain reaction.
For Bitcoin, the signal is twofold. On one hand, if overheated markets with record leverage turn downward, BTC, as a risky asset, could come under a wave of forced selling alongside stocks. On the other hand, if faith in gold as a safe haven falters, some capital will sooner or later begin to seek a new refuge, and that is when Bitcoin could capture this demand.
My view: The current configuration resembles a taut string. Record leverage is not a sign of strength, but an indicator of extreme market overconfidence. For Bitcoin, the key will be not so much the movement of gold, but its ability to hold above critical support levels in the event of a correction in traditional markets. For now, BTC is showing relative resilience, but ignoring these macro signals would be a mistake.