The Role of Leverage and Whale Activity in Bitcoin's Bullish Momentum

Leverage Normalization and the Post-Liquidation Reset

The October 2025 liquidation event, which erased $19 billion in perpetual futures positions and drove Bitcoin's price down 20%, marked a pivotal reset in leverage dynamics. By mid-October, leverage ratios in Bitcoin futures had normalized to the 61st percentile, signaling a return to more balanced risk levels after a period of aggressive speculative borrowing. This deleveraging was accompanied by a sharp decline in open interest-from a peak of $220.37 billion on October 6 to $146.06 billion by October 10-reflecting cascading liquidations and a flight to safety.

The normalization of leverage has created a more stable environment for bullish momentum. Funding rates, which had spiked to annualized borrowing rates of 9%, during the crisis, have since stabilized, reducing the drag on long positions. Meanwhile, Bitcoin's price has consolidated within a $110K–$118K range, supported by structural demand from ETF inflows and stablecoin issuance. This suggests that while speculative fervor has cooled, the market remains primed for a rebound if macroeconomic conditions align.

November 2025: Deleveraging and Mixed Signals

In November 2025, leverage ratios continued to decline, with Binance's Short-Term Estimated Leverage Ratio (ST_ELR) dropping to 0.2247-a level approaching the lower volatility threshold of 0.2069. Open interest in leveraged swap contracts on Bybit stalled at $9 billion, roughly half its pre-October peak, underscoring traders' reluctance to rebuild leveraged positions. On Binance, Bitcoin futures open interest fell 30% to $66.54 billion by November 18, reflecting a broader trend of risk aversion.

Despite these deleveraging trends, November also saw a 1.2% increase in Bitcoin's open interest to $85.3 billion, coupled with a 14.8% surge in trading volumes to $107.8 billion. This duality highlights a market at a crossroads: while speculative activity is rebounding, the 30-day open interest decline of 1.3 million BTC has raised questions about whether the market has reached a floor. Options data further complicates the picture, with a concentration of puts at the $85,000 strike and a widening put-call skew signaling heightened demand for downside protection.

Whale Activity and Structural Demand

On-chain signals in November 2025 reveal a nuanced picture of structural demand. Mid-sized holders-wallets holding 10–100 BTC and 100–1,000 BTC-emerged as key stabilizers during Bitcoin's decline from $106,000 to $79,500, accumulating at lower prices and supporting a rebound to $88,000. This contrasts with larger wallets (>10,000 BTC and 1,000–10,000 BTC), which have been trimming exposure and locking in profits.

A critical development was the sharp rise in the number of entities holding at least 1,000 BTC, which increased to 1,436 in late November-a reversal from earlier 2025 trends and a sign of growing conviction among larger participants that Bitcoin is undervalued. However, this optimism was tempered by the sale of a $1.3 billion BTC stack by major whale Owen Gunden in late November, which exacerbated downward pressure during a fragile market phase.

Strategic Positioning in Leveraged BTC Longs

The interplay between leverage normalization and whale behavior offers a roadmap for strategic positioning. With leverage ratios now at multi-month lows and funding rates neutralized, the risk profile for leveraged longs has improved. However, investors must remain cautious about the lingering fragility of bullish momentum, as evidenced by Bitcoin's sharp drop below key moving averages and the bearish put-call skew.

For those seeking exposure, a phased approach to leveraged longs-aligned with structural demand signals-appears prudent. The JP Morgan report suggesting Bitcoin needs a 67% increase in market capitalization to achieve risk-adjusted parity with gold implies a price target of $170,000. While this remains aspirational, the combination of ETF inflows, stablecoin demand, and whale accumulation provides a foundation for gradual re-entry.

Conclusion

Bitcoin's bullish momentum in late 2025 hinges on the delicate balance between deleveraging and structural demand. The normalization of leverage ratios has created a more stable environment, while whale activity underscores the market's potential to rebound from current levels. Investors should monitor on-chain signals, particularly the behavior of mid-sized holders and the trajectory of open interest, to time leveraged positions effectively. In a landscape where macroeconomic conditions remain pivotal, strategic patience and disciplined risk management will be key to capitalizing on Bitcoin's next leg higher.