30% Rally in Bitcoin: Leverage Share Declines as Fresh Capital Inflows Appear

While Bitcoin has surged approximately 30 percent since early July, capital inflows into the futures market have increased; during this rise, the share of leveraged positions in the total has declined.

According to CryptoQuant, the Bitcoin price has risen from $60,000 to $78,000 since early July. During the same period, the total value of open interest in futures rose from $20.6 billion to $24.9 billion. This movement in price corresponds to an increase of approximately 30 percent.

However, a critical divergence in the data reveals how much of these positions were expanded through borrowing. The leverage ratio peaked on August 14 before the rally began. The ratio then entered a downward trend and continued to decline despite the price jump after August 19.

Is the Bitcoin rally being sustained by fresh capital rather than leverage?

Leverage is the use of debt by an investor to open positions larger than their own capital. When the price moves in the opposite direction, lenders may force positions to be closed. These forced liquidations can cause debt-fueled rallies to drop sharply in a short time.

The structure here is formed by the decreasing share of leveraged positions while fresh money enters the market. Therefore, the current rally appears to have a sturdier foundation compared to the high-leverage period in mid-August. However, this outlook does not guarantee that the Bitcoin price will continue to rise.

The key signal to watch will be an increase in the leverage ratio while the price remains sideways. Such a movement could indicate that the rally is starting to be backed by debt again and that risk is increasing. In current data, this warning has not yet emerged.