Bitcoin price indicates that increased leverage ratios may indicate heightened risks for volatility as BTC stays above pivotal support.
At the time of writing, Bitcoin price continues to be under pressure despite having shown recent strength from its lows. Increased use of derivative contracts suggests that volatility will likely persist over the next few days.
As the largest cryptocurrency by market capitalization, Bitcoin is widely regarded as a benchmark for the broader digital asset market. At press time, BTC was trading at $66,699, up 1.45% over the past 24 hours.
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Bitcoin Price at $66.7K Faces Key Resistance
According to the data from TradingView, since finding a new lower high following its most recent peak price, the price of Bitcoin has made an effort to stabilize.
Although the Bitcoin price is currently slightly above the 20-day EMA ($66,786), this has indicated improvement in the short-term momentum. However, the price of Bitcoin is currently below several longer-term EMAs, including the 50-day ($70,740), 100-day ($73,338), and 200-day ($78,711), thereby indicating that the overall market trend is weak at this time.
The On-Balance Volume (OBV) indicator continues to be very negative, at approximately -1.29 million, indicating that buying pressure remains relatively weak.
The bounce off the support level around $63,391 is a good sign; however, Bitcoin price must break through the resistance level around $70,700 for there to be a stronger bullish case. At the present time, the overall market is in a recovery phase and has not confirmed the restoration of an uptrend.
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Binance Research Warns of Elevated Leverage
According to data from a Binance Research post on X,
“BTC derivative leverage ratio sits at ~5%, above its 5-year avg of ~3.5%,” and “Derivatives positioning hasn’t contracted with spot prices. When it doesn’t, volatility tends to get amplified on the way down.”
There is significant evidence that even after Bitcoin fell from a price of about $126K down to $64K, traders still maintain large leveraged positions. Provided that there are still many traders using elevated leverage, if selling pressure reemerges, this could contribute to liquidation-driven price moves.
There is also structural evidence in the technical analysis of BTC that market participants continue to maintain leveraged positions, which could contribute to volatility as price moves above or below key support and resistance levels.
While the Bitcoin price has regained some short-term support after a price correction, major resistance levels remain intact, and the Binance Research report highlights that traders continue to maintain elevated leverage despite the recent decline.
Bitcoin’s technical structure is currently at a balance point between improving short-term momentum and lingering downside pressure. As could be expected, Bitcoin’s current technical picture suggests that volatility may remain elevated in the sessions ahead. As always, the cryptocurrency market remains highly volatile.
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