The cryptocurrency market appears to be heating up rapidly as its parabolic rally nears its peak, with many industry leaders warning investors that a clear-out of leveraged positions may be inevitable ahead of the next big rally.
Bitcoin surged to $86,788 on Nov. 11, surpassing the $85,000 level. As of Nov. 12, investor sentiment on the Crypto Fear & Greed Index rose to 80, entering the “over-greedy” zone. This was one of the highest levels the index has ever seen. The 80-point level was last seen on April 9, after which Bitcoin’s value fell 18% from $69,135 to $56,500. This suggests that investors should be cautious about being overly optimistic and that a potential correction could be coming in such an environment.
Bitcoin is approaching $90,000 as of Nov. 12, following the banking crisis in 2023, reinforcing investors’ expectations for further appreciation in 2025. Over the past seven days, Bitcoin has made a significant gain, adding $413 billion to its market value.
Leverage Clearing Is Necessary Before Bitcoin Surpasses $100,000
Bitcoin’s current leverage ratios, or the amount of debt used to support trading positions, have reached sustainable levels. Crypto.com co-founder and CEO Kris Marszalek warned in a statement on Nov. 12:
“Leverage needs to be cleaned up, risk needs to be managed carefully ahead of $100,000 target.”
According to CryptoQuant data, the estimated leverage ratio of Bitcoin across all cryptocurrency exchanges is recorded at 0.217, which indicates a high close to October 2023 levels.
Investors are warned to be careful of high volatility, and a Donald Trump presidential victory is expected to accelerate Bitcoin’s price increase. Bybit’s head of derivatives, Shunyet Jan, told Cointelegraph:
“High financing rates and bullish option trends suggest that both retail and institutional investors are positioning for further gains. High financing rates, in particular, indicate strong demand for long positions and continued growth in investor confidence.”
Some analysts expect Bitcoin to surpass the $100,000 level by the end of the year, a rise that is expected to be driven by improved macroeconomic conditions following Trump’s presidential victory.
