Gold at its limit, while leverage in the US hits records: Bitcoin in the crosshairs of double risk
Financial markets are sending alarming signals that directly affect the cryptocurrency sector as well. My analysis of the current situation points to two key factors: gold overheating and extreme leverage levels in US markets. Together, they create an extremely fragile environment for all risk assets, including Bitcoin.
Gold, traditionally considered a safe-haven asset, is showing anomalies not seen since 2007. Its 180-day volatility is trading at a premium of approximately 2.3 times relative to the volatility of the S&P 500 index. This has transformed the precious metal from a safe haven into a speculative instrument. In February, when the price peaked at around $5,500 per ounce, gold was at a forty-year high relative to its 60-month moving average. Now, after a correction of roughly 30%, a bounce from the round support level of $4,000 would be technically normal, but the overall market sentiment remains overheated. The rise in yields on 30-year US Treasury bonds to nearly 5.2% — a high since 2007 — creates additional pressure on non-yielding assets, putting gold at an inherent disadvantage compared to stocks.
Record Leverage: $460 Billion at Play
An even more striking risk indicator is the volume of leveraged speculation in US markets. My data shows that the real volume of positions in US leveraged and inverse ETFs has reached a record $464 billion. Accounting for double and triple leverage, this figure has grown by roughly $200 billion since the beginning of April. The lion's share — $320 billion — is in triple-leveraged funds, followed by double-leveraged funds ($171 billion). Meanwhile, positioning has become extremely one-sided: inverse funds, which profit from market declines, account for only $27 billion. For comparison, during the 2022 bear market, the total exposure of such funds was only a fraction of current levels.
Both of these observations lead to one conclusion: markets are overloaded with bets on growth, and safe-haven assets are losing their function. For Bitcoin, this is a dual signal. On one hand, if overheated markets with record leverage reverse downward, BTC, as a risk asset, could be caught in 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 seeking a new refuge, and that is when Bitcoin could capture this demand.
My expert opinion: The current market configuration resembles a compressed spring. Any trigger — from macroeconomic data to geopolitics — could set off a chain reaction. Bitcoin remains in a zone of heightened volatility, and investors should be prepared for both sharp declines and sudden rallies if capital begins to flow out of overheated traditional assets.