Bitcoin forms a bottom amid record margin debt in the US: analysts spot reversal signals
The cryptocurrency market appears to be approaching a critical point. My analysis shows that Bitcoin is forming a bottom relative to the S&P 500 index, coinciding with a range of other reversal signals. Last year, Ethereum already bottomed against Bitcoin, and altcoin dominance marked a low against BTC this year. Now it is Bitcoin's turn—it is finding minimum values relative to the U.S. stock market.
Notably, the previous cycle peak is now acting as a strong support level. The market is likely already testing the bottom, while the majority of participants are still waiting for it to form. This is a classic psychological trap: the crowd waits not for the actual low, but for a signal that allows them to act. As I often note in my reviews, this creates a situation where the bottom goes unnoticed—while some seek confirmation of a reversal, the market has already passed the lowest point.
Record Margin Debt: A Hidden Threat to the Market
However, not everything is so clear-cut. My attention was drawn to a troubling macro signal: margin debt in the U.S. has surged sharply. Over the past month, it increased by another $112 billion, reaching a record $1.4 trillion. The volume of borrowed funds used for trading has more than doubled since 2023. This indicates aggressive accumulation of leverage in the U.S. market.
On one hand, this reflects high investor confidence, as they actively borrow to buy assets, including cryptocurrencies. On the other hand, in the event of a sharp market reversal, this increases the risk of forced sell-offs when brokers close debtors' positions. In the current situation, with Bitcoin seeking a bottom and margin debt hitting records, the market finds itself in an extremely volatile zone.
Expert Commentary from Cryptalist: The situation resembles a taut string. On one hand, technical indicators point to a bottom forming; on the other, the macroeconomic backdrop with record leverage creates a risk of a sharp crash. My advice: don't chase the "green light" signal to enter, but focus on risk management. The market may spring a surprise precisely when the crowd thinks it has received the "go-ahead."