Bitcoin (BTC) staged a mild rebound from yesterday\u2019s inflation-driven drop to $117,180, climbing back toward $119,000 at the time of writing. A declining leverage ratio suggests the top cryptocurrency\u2019s bullish momentum could persist, keeping it in the running for a new all-time high (ATH) in the near term.<\/p>\n
According to a CryptoQuant Quicktake post by contributor Arab Chain, Bitcoin\u2019s leverage ratio across all cryptocurrency exchanges has sharply declined from its late-July and early-August peak of 0.27.<\/p>\n
Notably, the ratio dropped to 0.25 in early August before a modest rebound. In contrast, the period from May to late July saw both the price and leverage ratio climb in tandem, signaling an influx of traders opening larger positions.<\/p>\n
In contrast, this time leverage has fallen without a comparable drop in price \u2013 a sign that risk has eased since the recent uptrend. Arab Chain notes that this may be the result of high-risk positions being liquidated or traders exiting the market amid volatility.<\/p>\n
With BTC holding around $119,000, the lower leverage ratio is a bullish sign, suggesting that the latest price gains are fueled more by genuine liquidity than speculative excess.<\/p>\n
A continued decline in leverage could further reduce the likelihood of a sharp correction. Conversely, a sudden spike in leverage alongside a price rally would raise the risk of a pullback. The analyst added:<\/p>\n
If leverage remains at moderate or low levels while the price remains stable, this could provide a stable base for a new uptrend. An estimated leverage ratio (ELR) holding between 0.24\u20130.25, accompanied by a gradual price break above 120K, could indicate a spot-supported upside and a possible extension toward the July highs, with moderate funding and slowly rising open interest.<\/p>\n
However, a quick jump in the leverage ratio above 0.27 before or during a test of $120,000\u2013$124,000 could signal high liquidation risk and the potential for a sharp downward \u201cshakeout.\u201d<\/p>\n
While lower leverage is encouraging for Bitcoin bulls, on-chain data \u2013 particularly rising exchange reserves and whale transfers<\/a> \u2013 hints at possible selling pressure ahead.<\/p>\n For instance, Binance\u2019s BTC reserves have recently surged<\/a> to 579,000, raising concerns of profit-taking after Bitcoin\u2019s recent rally to a fresh ATH. Likewise, more BTC miners are moving<\/a> their holdings to Binance, potentially preparing to sell.<\/p>\n