Bitcoin market shows late-cycle patterns as leverage peaks

Bitcoin (BTC) is experiencing declining superior inflows and surging speculative activity, mirroring patterns observed adjacent erstwhile rhythm peaks, according to an Aug. 20 Glassnode report.

BTC retraced astir 9.2% to $112,900 pursuing past week’s precocious astatine $124,400, accompanied by substantially weaker superior inflows compared to earlier 2024 breakouts. 

The realized headdress accrued conscionable 6% monthly during the existent rally, importantly beneath the 13% complaint recorded during the archetypal $100,000 breakout successful precocious 2024.

The study noted that investors showed constricted request adjacent amid reduced profit-taking activity from existing holders. 

The Volatility-Adjusted Net Realized Profit/Loss metric shows markedly little selling unit compared to large breakouts astatine $70,000, $100,000, and July’s $122,000 peak.

The disparity suggests the marketplace failed to prolong momentum adjacent with lighter sell-side pressure.

Leverage drives marketplace volatility

Futures markets exhibited pronounced enactment during Bitcoin’s caller terms action, with unfastened involvement crossed Bitcoin contracts maintaining elevated levels astatine $67 billion. 

The correction eliminated $2.3 cardinal successful unfastened interest, representing 1 of the 23 largest nominal declines connected record.

Altcoin derivatives reached caller extremes, with combined unfastened involvement crossed large tokens surging to $60.2 cardinal earlier declining $2.6 cardinal during the play correction. 

Combined altcoin liquidations peaked astatine $303 cardinal daily, much than treble Bitcoin futures liquidation volumes.

Ethereum perpetual futures measurement dominance deed an all-time precocious of 67%, marking the strongest structural displacement toward altcoin speculation connected record. At the aforesaid time, unfastened involvement dominance climbed to 43.3% against Bitcoin’s 56.7%, reaching its fourth-largest level historically.

Previous highest parallels emerge

The study argued that existent marketplace timing aligns intimately with erstwhile bull cycles. 

Both 2015-2018 and 2018-2022 cycles reached all-time highs astir 2 to 3 months beyond the existent cycle’s comparative presumption erstwhile measured from rhythm lows.

Bitcoin’s circulating proviso has remained supra the affirmative one-standard deviation set for 273 days, the second-longest play connected grounds down the 2015-2018 cycle’s 335 days.

Long-term holders person realized nett volumes comparable to each erstwhile cycles but 2016-2017, indicating important selling unit from historically diligent investors.

These metrics collectively suggest the existent rhythm operates successful its historically precocious phase, though the study noted each rhythm carries unsocial characteristics that forestall guaranteed temporal patterns.

The operation of weakening demand, grounds leverage levels, and humanities timing parallels creates conditions reminiscent of erstwhile rhythm peaks, though marketplace improvement could change accepted four-year patterns moving forward.

The station Bitcoin marketplace shows late-cycle patterns arsenic leverage peaks appeared archetypal connected CryptoSlate.