Bitcoin Drops to $58,000 as Leverage Hits Yearly High

Recently, Bitcoin (BTC) broke through the psychological barrier and surged into the $60,000 price range. However, this milestone brought considerable pressure, as some large holders (whales) took profits, and Bitcoin’s estimated leverage ratio reached a yearly high.

Bitcoin’s leverage hits its highest level in a year

Data from CryptoQuant shows that Bitcoin’s estimated leverage ratio spiked to 0.216, the highest it has been in 2024. This metric reflects the amount of leverage (borrowed funds) being used in Bitcoin trading.

Rising leverage typically indicates that traders are taking on increased risk. If BTC’s price moves in the opposite direction of these leveraged positions, it could trigger large-scale liquidations as traders are forced to close their positions. Such events often lead to rapid price declines.

Furthermore, the increase in leverage suggests a potential for heightened price volatility. As leverage grows in the market, price swings—whether upward or downward—become more exaggerated.

If BTC continues to climb alongside rising leverage, the market could become overheated, making any pullback potentially lead to significant liquidations.

Additionally, a sudden price drop could trigger liquidations, causing BTC’s value to plummet further.

Bitcoin faces resistance after price decline

After surging over 4% on September 13, Bitcoin broke through its short-term moving average, trading around $60,000.

However, it struggled to maintain this upward momentum, as shown by subsequent trends. Bitcoin’s price dropped in the following session to around $58,555. The lack of strong follow-through suggests the asset encountered significant selling pressure, with some investors locking in profits after BTC’s rise.

Whales take advantage of price rally

Data from CryptoQuant reveals that Bitcoin whale addresses capitalized on the recent price surge to secure profits. As BTC broke through the $60,000 barrier, the realized gains for these whales soared.

Whale trading addresses reportedly secured profits exceeding $50 million, taking advantage of the price increase.

This whale activity highlights the pressure Bitcoin faces at this price level, as large investors taking profits could lead to short-term price volatility.