Bitcoin’s massive gains amid a surge in Bitcoin ETF inflows are signalling strong demand, but analysts warn that rising leverage introduces short-term risks.
Nearly all of Bitcoin’s supply is now in profit after a recent rally, but rising leverage and “crowded call positioning” could suggest growing short-term fragility, according to onchain analytics.
As of Wednesday, 97% of Bitcoin (BTC) supply is in profit, reported blockchain analytics provider Glassnode.
“Building on the accumulation trend, Bitcoin’s rally to a new all-time high has lifted nearly all circulating supply back into profit.”
Elevated profit levels often precede consolidation and realized profits remain contained, “suggesting an orderly rotation rather than distribution pressure,” the analysts added.
This means that investors have been gradually taking profits and reallocating their holdings rather than panic selling en masse. This is typical of a healthy bull market where profit-taking is balanced by fresh demand.
Glassnode used a “Cost Basis Distribution Heatmap” to highlight structural support, noting that it was limited between $121,000 and $120,000 and stronger near $117,000, where roughly 190,000 BTC were last acquired.
“While price discovery phases inherently carry the risk of exhaustion, a potential pullback into this region could invite renewed demand as recent buyers defend profitable entry zones.”
This makes the $117,000 zone a key area to watch for “stabilization and a resurgence of momentum.”
Glassnode also observed “surging volumes confirm strong institutional demand” in Bitcoin futures and spot ETF markets, but rising leverage and funding rates could “introduce short-term fragility.”
Spot Bitcoin ETFs in the United States have seen more than $2.5 billion in inflows, including their second-highest inflow day, in the first three days of this week, according to CoinGlass.
Related: Here’s the real reason the 4-year Bitcoin cycle is dead: Arthur Hayes
This week’s onchain signals outline a “robust yet maturing uptrend, one that remains supported but increasingly sensitive to profit-taking and leverage resets as Bitcoin navigates price discovery,” the analysts concluded.
BTC prices have retreated from a late Wednesday high of $124,000 to just below $122,000 at the time of writing.
