Gold at its limit: overheating and record leverage threaten bitcoin
Financial markets are sending alarming signals, and as an analyst, I see this as a direct threat to Bitcoin (BTC). Two independent observations point to the formation of an extremely fragile environment for risky assets: gold appears overheated, and the volume of leveraged trading in the US has reached an all-time high.
Gold Has Lost Its "Safe Haven" Status
My analysis of the precious metal's dynamics confirms: gold has transformed from a defensive asset into a speculative instrument. After peaking around $5,500 per ounce in February, the correction amounted to approximately 30%. However, the key indicator — gold's 180-day volatility — is trading at a 2.3x premium to the volatility of the S&P 500 index for the first time since 2007. This is abnormal. The last time such a situation occurred, it preceded the Great Recession and exposed abnormally low stock market volatility.
Additional pressure comes from the rise in 30-year US Treasury yields to nearly 5.2% — a high since 2007. In such conditions, assets that do not generate income, including gold and Bitcoin, find themselves in a clearly disadvantageous position.
Record Leverage: Markets on the Brink
An even more alarming signal is the data on leveraged speculation in US markets. Assets under management in leveraged and inverse ETFs have reached $208 billion. Considering double and triple leverage, the real volume of positions exceeds $460 billion. Moreover, since the beginning of April, it has grown by approximately $200 billion. The lion's share ($320 billion) consists of triple-leveraged funds, while inverse funds, which profit from declines, account for a mere $27 billion. For comparison: during the 2022 bear market, the total exposure of such funds was only a fraction of current levels. I cannot recall such an extreme one-sided skew.
Both of these observations lead to one conclusion: markets are overloaded with bets on growth to the limit, and traditional defensive assets themselves have become part of this speculative game.
For Bitcoin, the signal is twofold. If overheated markets with record leverage reverse downward, BTC, as a risky asset, will come under a wave of forced selling alongside stocks. However, if faith in gold as a safe haven is shaken, some capital will sooner or later begin to seek a new refuge. And then Bitcoin could capture that demand. But for now — I remain cautious: the current configuration too closely resembles the eve of a sharp reversal.