Bitcoin goes into the Fed with leverage at its most stretched since September

Bitcoin goes into Wednesday's Fed decision with its futures market more stretched than at any point since September. Our new leverage gauge (Plus) read 83 out of 100 at 13:00 UTC, in its extreme band. It peaked at 87 at 08:00 UTC on Tuesday, the highest reading since 22 September, and it has stayed in the extreme band every hour since midnight UTC on Tuesday. Bitcoin was trading at about $80,700.

The gauge doesn't say which way the price will break. It says how much fuel there is for a big move, and right now there's a lot of it.

What is stretched

The gauge scores four parts of the market, each against bitcoin's own past year. On the component chart (Plus), three of the four score 97 or more out of 100:

The crowd leans long. Funding is positive and higher than on almost any day of the past year, which means longs are paying shorts to keep their bets open. More accounts are long than usual, too.

The nearest cluster is on the long side as well. Our liquidation map (Plus) of 13:35 UTC puts the largest pocket of long liquidations at $78,738: about $79 million of positions that would be forced shut 2.3% below the price. Within 5% of the price there are an estimated $386 million of long liquidations below and $271 million of short liquidations above, so a 5% fall would force out about 1.4 times as much as a 5% rise. The largest short cluster is much further away, $56.5 million at $88,421, 9.7% up. The current map is free on our Bitcoin liquidation heatmap.

What usually follows

We grade every hourly reading since September 2020 against what the price did next, and the record is public on the leverage gauge backtest. For bitcoin, up to 18 October:

A big move is one of more than 3.2% in 24 hours, the largest fifth of bitcoin's daily moves. After extreme readings, the typical three-day move was about 50% bigger than normal, and a big day followed 28% of the time instead of 20%. Those moves count in either direction: our research found that the same positioning data doesn't tell up from down.

The last extreme spell shows how fast it can go. It started on 18 September, two days after the Fed's September meeting. Bitcoin closed at $80,878 that day and at $86,594 on 21 September, up 7% in three days, before the gauge cooled on the 23rd. That time the squeeze went up. This time a fall would force out more positions than a rise of the same size, because the longs are the crowded side.

What to watch

• 18:00 UTC (2pm ET): the Fed's decision, with the press conference half an hour later.
• $78,738: the nearest long liquidation cluster, 2.3% below the price.
• $88,421: the largest short cluster, 9.7% above.
• Friday 30 October, 08:00 UTC: the October options expiry, with about $12.4 billion of open interest and max pain at $79,000 on our free options expiry page.
• The gauge itself: a fall back under 75 would mean positions have been closed or flushed out. Today's reading is free on our Bitcoin leverage page, updated every hour.

How we measure it

The gauge ranks each part's hourly reading against bitcoin's own readings over the trailing 365 days. Open interest scores its rank. The liquidation cluster scores 100 minus its rank, because nearer is more stretched. Funding and the account ratio score how far they sit from the middle in either direction, because a crowd leaning hard either way is stretched. The gauge is the average of the scores, and its bands were fixed before the record was measured. Every window ends at the hour it scores, so nothing looks ahead.

Open interest is Bybit's perpetual open interest as a share of bitcoin's market cap, which is our price times the supply from our own node. Funding is Binance's and Bybit's settled funding, averaged over 24 hours. The account ratio is Bybit's, because its public record goes back years. The liquidation cluster comes from our own calibrated liquidation map, a model replayed over history; since 14 October, Bybit has liquidated 91% of what the map estimated at the levels the price reached. Two more parts join once they have 30 days of readings: the futures basis around 13 November and Hyperliquid's large accounts around 19 November.

Today's reading and the full backtest are free. The hourly history since 2020, the component scores and alerts come with Plus.