Gold is overheated, leverage is at its peak — Bitcoin under double pressure
Markets are sending alarming signals. Two independent observations indicate that the financial landscape is becoming increasingly fragile. Gold, traditionally considered a safe-haven asset, is showing signs of overheating, while the volume of leveraged trading in US markets has reached historic highs. For Bitcoin, this creates an extremely ambiguous and potentially dangerous environment.
Gold Loses Its "Safe Haven" Status
Analysis of long-term trends suggests that gold may have passed its peak. In January-February, when the precious metal updated its all-time highs around $5,500 per ounce, its volatility reached levels unseen since 2007. Gold's 180-day volatility is now 2.3 times higher than the volatility of the S&P 500 index. The last time such a disparity occurred was before the Great Recession, which is an extremely alarming historical precedent.
After a correction of approximately 30% from its peak, gold is now trading near the round support level around $4,000. A bounce from this level would be technically expected, but the overall context indicates that the precious metal has transformed from a haven into a speculative instrument. The rise in yields on 30-year US Treasury bonds to nearly 5.2% — a high since 2007 — creates powerful competition for assets that do not generate interest income, such as gold and Bitcoin.
Record Leverage: Markets at the Limit
Even more alarming data is coming from the US ETF market. The volume of assets under management in leveraged and inverse funds has reached a record $208 billion. The actual exposure, considering double and triple leverage, exceeds $460 billion. Since the beginning of April, this figure has grown by nearly $200 billion. Meanwhile, inverse funds, which profit from declines, account for only $27 billion. Such extreme one-sidedness — a bet solely on growth — has never been observed before. This makes markets extremely vulnerable to any shift in sentiment, which could trigger a chain reaction of forced selling.
Expert Commentary: The scenario for Bitcoin here is twofold. On one hand, as a high-risk asset, BTC could be caught in a wave of liquidations alongside stocks if overheated markets with record leverage begin to fall. On the other hand, disappointment in gold as a safe-haven asset could redirect some capital into Bitcoin, which is increasingly being perceived by a new generation of investors as "digital gold." However, in the short term, the risk of a correction prevails.