Bitcoin is experiencing a significant shift in market structure as leverage steadily declines across derivatives markets, according to analysis from Joao Wedson, founder of Alphractal and verified CryptoQuant author. The market has moved from an extreme leverage phase into moderate and slight leverage conditions amid heightened volatility that has kept Bitcoin's price below $65,000. The deleveraging follows recent liquidations last week and coincides with small whales—wallet addresses holding between 100 BTC and 1,000 BTC—returning to loss positions as Bitcoin declined to the $60,000 threshold. The shift reflects increased trader caution and reduced speculative positioning in derivatives markets. Lower leverage environments typically indicate healthier market structures based on spot demand rather than speculative momentum, though the market has not yet reached the extreme deleveraging zone that historically signals optimal entry conditions.
Bitcoin Market Transitions to Moderate Leverage Phase
Bitcoin has left the extreme leverage phase and moved into moderate and slight leverage conditions, according to Joao Wedson's recent analysis of the Bitcoin Leverage Pressure Zone. The risk of large-scale liquidations has decreased as aggressive positioning in derivatives markets has subsided. Many traders were liquidated last week, and the risk of forced liquidations is now dropping significantly.
Wedson highlighted that the market has not yet reached the blue/purple zone indicated on his chart, which marks extreme deleveraging. In the past, this region was considered an ideal one to gain exposure with greater safety. The expert claims that the market has not yet gotten to that phase, but it will likely take a few more weeks or months before reaching that stage.
Despite the shift into moderate and slight leverage, Wedson urged investors to approach the derivatives market with caution. "If you do not understand its health, you can be liquidated at any moment," he stated.
Small Whale Holders Return to Unrealized Loss Territory
Small whales are now underwater as bearish performance mounts, according to CW, a data analyst and investor. Small whales represent wallet addresses holding between 100 BTC and 1,000 BTC, and these investors have returned to a loss position. This shift in profitability is attributed to the recent decline in BTC's price to the $60,000 threshold.
For the group to return to profit territory, BTC's price must bounce back to the $64,000 mark, according to CW. The expert added that the brief uptrend of Bitcoin started as these investors slowly approached the profit zone. Recovering the $64,000 level is the first condition for the rise to kick off.
At the time of writing, Bitcoin's price was trading at $63,370, showing a nearly 1% rise within the past day. While prices are slowly turning bullish, BTC's trading volume within the same time frame dropped by over 5%.
FAQ
What does lower leverage mean for the Bitcoin market?
Lower leverage indicates that traders are using less borrowed capital in derivatives markets, reducing the risk of large-scale forced liquidations. According to Joao Wedson's analysis, Bitcoin has moved from extreme leverage conditions into moderate and slight leverage phases, which typically reflects a healthier market structure based on spot demand rather than speculative momentum.
Why are small Bitcoin whales currently in losses?
Small whales—wallet addresses holding between 100 BTC and 1,000 BTC—returned to unrealized loss positions due to Bitcoin's recent decline to the $60,000 threshold. According to analyst CW, these investors need Bitcoin's price to recover to $64,000 to return to profit territory.
