Leverage Hits Yearly High as Crypto Prepares for Potential Q4 Reset
Crypto leverage has reached its highest level since October 10th, indicating that traders are betting on further upside and showing growing confidence in crypto. Despite this optimism, on-chain data suggests that a short-term pullback could be building. The TD Sequential indicator, which has been accurate on Bitcoin's 4-hour chart, has issued a sell signal, suggesting that short-term bullish momentum may be capped.
More than $100 million in sell orders already exist around the current price range of BTC, indicating that sellers are ready to exit at these levels and limit further gains. This could lead to a long squeeze of leveraged positions, attracting new buyers and creating a bull trap. However, what if this setup is more bullish than bearish?
Crypto has shown resilience despite the recent market FUD, creating a divergence from other asset classes. Bitcoin has outperformed the Nasdaq by 42% over the past three months and its purchasing power against gold has risen by roughly 21%. This growing divergence between crypto and traditional risk assets could lure in more capital as investors seek to diversify.