Crypto leverage has climbed to its highest level since October 10th even as a technical indicator on Bitcoin's chart flips bearish for the short term. Traders including the Machi brothers keep adding to leveraged positions, while over $100 million in sell orders sit near Bitcoin's current price, setting up a possible squeeze that could turn bullish for the rest of Q4.
Leverage climbs as sellers line up near Bitcoin's price
Total crypto market cap has held near $2.7 trillion despite a Fed rate hike, with high-cap assets weathering the pressure. Beneath that stability, leverage in the crypto market has reached its highest level since October 10th, and traders keep adding to positions regardless. The Machi brothers, for instance, raised their position to $131 million.
However, the TD Sequential indicator on Bitcoin's four-hour chart, which correctly flagged a buy signal before an 8.5% rebound over the past few days, has now flipped to a sell signal. As a result, short-term upside is likely to be capped as traders take profits. On top of that, more than $100 million in sell orders already sit around Bitcoin's current price range, which may limit further gains and set up a long squeeze of leveraged positions.
Bitcoin diverges from equities as the macro backdrop turns volatile
According to AMBCrypto, the Kobeissi letter expects an "eventful" quarter, with rate hikes, midterm elections, oil above $100, and a 10-year yield above 5% all adding pressure, even as stocks sit near record highs. Yet crypto has stayed resilient through the recent market FUD, creating a divergence from other asset classes. Notably, Bitcoin has outperformed the Nasdaq by 42% over the past three months.
The BTC/Gold ratio tells a similar story: it has climbed to 18.55, up from about 15.3 a month ago, meaning Bitcoin's purchasing power against gold has risen roughly 21%. Therefore, a short-term pullback could actually turn bullish, flushing out excess leverage and clearing the way for fresh buyers to step in. Should that happen, the setup could pave the way for BTC to reclaim $85k and spark a stronger Q4 rally.
Source: AMBCrypto
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