Gold is overheated, leverage in the US hits records: what this means for bitcoin
Markets are sending several alarming signals simultaneously. On one hand, gold looks more overheated than it has in decades. On the other, the volume of leveraged trading in the US has reached an all-time high. In this configuration, Bitcoin (BTC) finds itself under double pressure, and any shift in sentiment could trigger a chain reaction.
Gold: From Safe Haven to Speculative Asset
Analysis of the current situation in the precious metals market points to an anomaly. Gold's 180-day volatility is trading at a premium of approximately 2.3 times the volatility of the S&P 500 index for the first time since 2007. This has transformed the traditional safe-haven asset into a high-risk instrument. The last time such a shift occurred, it preceded the Great Recession and exposed the abnormally low volatility of the stock market.
After a February peak of around $5,500 per ounce, gold has corrected by approximately 30%. However, even at current levels—around $4,000—the precious metal is at a forty-year high relative to its 60-month moving average. Add to this the rise in yields on 30-year US Treasury bonds to nearly 5.2% (a high since 2007). In such conditions, non-yielding assets, including gold, find themselves at a clear disadvantage compared to stocks.
Record Leverage: $464 Billion in Play
An even more alarming signal comes from the US ETF market. Assets under management for American leveraged and inverse ETFs have reached a record $208 billion. Considering double and triple leverage, the real volume of positions exceeds $464 billion. Moreover, since the beginning of April, this figure has grown by approximately $200 billion. The lion's share ($320 billion) comes from triple-leveraged funds, 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. Never before has the leverage embedded in US markets been so extreme.
What This Means for Bitcoin
The signal for the leading cryptocurrency is twofold. If overheated markets with record leverage turn downward, Bitcoin, as a risk asset, could come under a wave of forced selling alongside stocks. However, there is also a flip side: if faith in gold as a safe haven wavers, some capital will sooner or later begin to seek a new refuge. And then Bitcoin could capture that demand.
My expert assessment: The current market configuration is a classic "overheating" scenario ahead of a correction. Bitcoin will likely be unable to avoid short-term pressure in the event of a stock market crash. But the medium-term potential for BTC as an alternative asset remains high, especially against the backdrop of discredited traditional safe-haven instruments.