Bitcoin leverage skyrockets to historic highs! Glassnode: Market enters late cycle mode.

According to Glassnode's latest on-chain report on August 20, the Bitcoin (BTC) market is showing characteristics similar to historical peaks: capital inflow is slowing, leverage rates are reaching all-time highs, and speculative activity is surging. These signals are highly consistent with the later stages of past long positions cycles, suggesting that the market may be at a structural turning point.

Capital inflow weakens: Momentum is not as strong as at the beginning of the year

BTC fell about 9.2% to $112,900 after reaching a high of $124,400 last week, while capital inflows significantly cooled.

Achieving upper limit growth rate: During the current rebound period, it is only increasing by 6% per month, far below the 13% when it breaks $100,000 at the beginning of 2024.

Profit-taking has decreased but demand is insufficient: even though the selling pressure from existing holders has decreased, new buying has still been limited.

Net realized gains and losses after volatility adjustments: Compared to the highs of $70,000, $100,000, and $122,000 in July, selling pressure has significantly weakened, but the momentum is still insufficient to drive new highs.

Leverage Rate Peaks: Futures and Altcoin Derivatives Overheating

The futures market has become the core driving force behind recent volatility:

BTC futures open interest: Remains at $67 billion high, decreased by $2.3 billion during this round of adjustment, marking the 23rd largest nominal decline in history.

Shanzhai coin derivatives: The total amount of open contracts once surged to $60.2 billion, falling back $2.6 billion over the weekend.

Settlement data: The daily settlement amount of altcoins reached $303 million, more than double that of BTC.

Ethereum perpetual contract trading volume share: reached a historic high of 67%, indicating a shift in market speculation focus towards altcoins.

Historical Cycle Comparison: Time Position Approaching Peak

Glassnode compares the current cycle with the bull markets of 2015–2018 and 2018–2022:

Based on the cycle low, historical highs typically occur 2-3 months after the current position.

Circulating supply: has been above one standard deviation interval for 273 consecutive days, marking the second longest record in history (only behind the 335 days from 2015–2018).

Long-term holders realize profits: Similar to all cycles except for 2016-2017, it shows that the selling pressure from patient investors is being released.

Late Cycle Signals and Future Variables

The report believes that weakened demand, extremely high leverage, and historical time similarities constitute market conditions similar to past peaks. However, it is important to note:

Each cycle has different characteristics: changes in macroeconomics, regulatory environments, and market structures may break the traditional four-year cycle model.

Short-term risk: High leverage means that severe fluctuations in either direction may trigger a chain liquidation.

Potential catalysts: ETF capital flows, macro policies (such as interest rate cut expectations), and on-chain adoption data may all change the market rhythm.

Conclusion

The current leverage ratio and cycle position of the Bitcoin market are remarkably similar to historical peaks. While this does not mean that prices will top out immediately, it is a signal that requires high vigilance from traders and investors. In the short term, controlling leverage and risk management will be key; in the long term, on-chain adoption and the macro environment will determine whether BTC can break through the existing cycle ceiling. For more on-chain data and market analysis, please follow the official Gate platform.