Bitcoin Futures Leverage Ratio Suggests Cooling Volatility – Are Short-Term Liquidations Over?

Bitcoin is holding above the crucial $95,700 level, a key demand zone that bears have repeatedly failed to break. This level has provided strong support, preventing further downside despite ongoing uncertainty in the market. However, investor sentiment is starting to shift as frustration grows over Bitcoin’s slow movement. Many expected a smoother bull run, yet BTC continues to consolidate within a tight range below the $100K mark.

Market fatigue is evident as both bulls and bears struggle to gain control, leading to reduced volatility. Meanwhile, fresh data from CryptoQuant reveals that the Bitcoin Futures Estimated Leverage Ratio has shown only a small change. This suggests that the futures market is stabilizing, with a lower risk of forced liquidations. When leverage remains low, the market tends to experience less extreme price swings, reducing the likelihood of sharp liquidations that often cause rapid price drops or spikes.

While Bitcoin’s long-term outlook remains bullish, short-term price action continues to test investors’ patience. The coming days will be crucial in determining whether BTC can reclaim key resistance levels or if another wave of selling pressure will challenge the current support zone.

Bitcoin Holds Strong As Market Stabilizes

Bitcoin has remained resilient despite the recent Bybit hack, where the exchange lost over $1.4 billion in ETH to attackers. The news caused fear across the market, leading to a price drop, but BTC managed to hold firm above the $95K support. This crucial level has acted as a strong demand zone, preventing bears from pushing prices lower. While Bitcoin has yet to reclaim the $100K mark, its ability to maintain key levels suggests that a potential recovery rally could be on the horizon.

Top analyst Axel Adler shared crucial data on X, revealing that the Bitcoin Futures Estimated Leverage Ratio is showing only a small change. This indicates that the futures market is stabilizing, reducing the likelihood of mass liquidations. A high leverage ratio often signals excessive risk-taking, leading to forced liquidations that trigger sharp price movements. However, the current trend suggests a decrease in volatility, with traders reducing their exposure to leverage-driven price swings.

This development is critical because it reflects a more controlled trading environment. A lower risk of overheating means BTC could see a more sustainable uptrend instead of extreme price fluctuations. Historically, Bitcoin’s major rallies have often followed periods of futures market stabilization, as reduced leverage allows organic demand to drive prices higher.

With BTC holding above key demand and the futures market showing signs of balance, the next move could be significant. If bulls reclaim the $98K level and push past $100K, an aggressive rally could follow. However, failure to hold above $95K could open the door for bears to retest lower demand levels around $90K. The coming days will be crucial in determining whether BTC breaks out into new highs or continues consolidating within its current range.

Price Testing Liquidity Around $95K

Bitcoin is trading at $95,700 after a rollercoaster Friday that saw BTC reach as high as $99,500 before dropping to $94,800 following the Bybit hack news. The sudden sell-off triggered panic across the market, but Bitcoin managed to hold above critical demand at the $95K level, preventing further downside.

Now, bulls face a crucial test—holding this support zone for the weekend and building momentum to push BTC back above $98K. Reclaiming this level would set the stage for another attempt at breaking through the psychological $100K barrier, which has remained a major resistance for weeks. If BTC confirms a breakout above $98K and holds, a rally into new highs could follow.

On the other hand, if Bitcoin fails to sustain support above $95K, the market could see increased selling pressure. A drop below this level would likely send BTC into lower demand zones, with $90K being the next major support level. Investors are now watching closely, as next week will be pivotal in determining Bitcoin’s short-term direction. A decisive move in either direction could set the tone for the next phase of BTC’s price action.

Featured image from Dall-E, chart from TradingView