Gold is overheated, leverage in the US hits records — bitcoin under double pressure
Markets are sending alarming signals. Several independent studies indicate that traditional safe-haven assets are losing their function, while speculative overload on US exchanges is reaching historical extremes. In this configuration, bitcoin finds itself in a vulnerable position — as a risky asset susceptible to systemic shocks.
Gold: From Safe Haven to Speculative Instrument
An analysis of the precious metal's market dynamics shows that its volatility relative to the S&P 500 index has reached a premium of 2.3 times — the highest since 2007. Such a divergence was last observed on the eve of the Great Recession. Essentially, gold has ceased to be a safe haven and has transformed into a high-risk asset traded on emotions.
In February, the metal hit a price peak around $5,500 per ounce, sitting at a 40-year high relative to the 60-month moving average. However, a subsequent correction of nearly 30% has not changed the overall picture of overheating. The rise in yields on 30-year US Treasury bonds to 5.2% — a level from 2007 — creates strong competition for non-yielding assets. Gold risks ending up in a losing position compared to stocks and debt securities.
Record Leverage: $464 Billion at Stake
An even more alarming signal comes from the US ETF market. The total volume of leveraged positions — both in direct and inverse funds — has reached a record $208 billion. Taking into account double and triple leverage, the real exposure exceeds $464 billion. Meanwhile, inverse funds, which profit from declines, account for only $27 billion. Such one-sidedness leaves the market in an extremely fragile state.
For comparison: during the bear market of 2022, the total exposure of such instruments was only a fraction of current levels. Never before has the US market been so burdened with speculative leverage.
What This Means for Bitcoin
The situation for BTC is twofold. On one hand, if overheated markets with record leverage turn downward, bitcoin, as a high-risk asset, will 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 to seek a new refuge. And that is when bitcoin could capture this demand.
My expert opinion: right now, the risks outweigh the benefits. Historically, such extreme levels of leverage have preceded sharp corrections, and bitcoin is unlikely to remain unaffected. Investors should be prepared for heightened volatility and possibly a temporary decline — before the market finds a new equilibrium.