Bitcoin Price Forecast: Could rising leverage in derivatives markets expose BTC to sharp moves?

• Bitcoin remains near $73,800 on Wednesday, having dropped to $72,727 after the previous day’s strong US inflation readings.
• Withdrawals from US-listed BTC spot ETFs extended to a fourth consecutive day on Tuesday, with outflows totalling $95 million.
• Heavy leverage in BTC derivatives is raising the risk of a sharp move in either direction, reports indicate.

Bitcoin (BTC) remains under pressure around $73,800 on Wednesday, after the previous day’s strong US inflation readings drove it to a low of $72,727. Further evidence of weakening institutional demand came from BTC spot Exchange Traded Funds (ETFs), which registered $95 million in outflows on Tuesday, their fourth consecutive day of withdrawals. With leverage accumulating in derivatives markets, a K33 Research report flags the risk of sharp BTC price swings, warranting caution among traders.

Why Are Strong US Inflation Readings Lifting Yields and the US Dollar but Hurting BTC?

October’s headline US Consumer Price Index (CPI) increased 0.4%, exceeding the market forecast of 0.3%, according to the closely watched data published on Tuesday. Excluding volatile food and energy prices, core CPI climbed 0.3%. That matched September’s rise but exceeded the estimated 0.2%. 

Annual inflation readings were absent from this release because October 2025 monthly data is unavailable following the government shutdown from 1 October 2025 to 12 November 2025.

Risk appetite is weakening after the stronger-than-anticipated US CPI readings. At the same time, rising expectations of additional monetary tightening by the Federal Reserve (Fed) are lending support to the US Dollar (USD) and US Treasuries. 

Concerns over a possible December interest rate increase by the Federal Reserve (Fed) have intensified since Tuesday’s inflation release. A stronger-than-expected core CPI reading of 0.3% could lead Fed Governor Christopher Waller to consider a larger 50-basis-point (bps) hike at the 8–9 December policy meeting, he warned. Waller also said that restricting the increase to 25 bps could jeopardise the Fed’s credibility.

The need to maintain restrictive policy to bring inflation back to 2% was also highlighted by Philadelphia Fed President Anna Paulson. Dallas Fed President Lorie Logan, meanwhile, indicated that interest rates may have to rise more quickly than previously envisaged. 

With the 10-year Treasury yield climbing above 5%, this hawkish policy stance is lifting the USD and Treasury yields while putting pressure on risk assets, including Bitcoin.

What Is Driving the Wave of Crypto Liquidations?

BTC’s steep correction following the stronger-than-expected US CPI release is illustrated in the CoinGlass liquidation chart below. Tuesday’s decline took the price to $72,727, its lowest level since 20 August.

Liquidations spread across the crypto market as prices fell sharply. Leveraged long positions accounted for most of the wipeout, underscoring the extent of bullish positioning.

For the leading cryptocurrency, the continued build-up of derivatives leverage also keeps the risk of abrupt price swings high.

BTC perpetual futures Open Interest (OI) has reached 353,000 BTC, according to K33 Research, placing it in the 99th percentile of readings over the past two years. Over the past week, annualised funding rates have averaged 8.4%. This points to persistent demand for long exposure even as BTC tests important support levels.

The analyst concluded: “Historically, similarly elevated open interest has coincided with price extremes and periods of substantial volatility, often preceding sharp reversals. While elevated leverage provided fuel for upside moves in June and August, current positioning appears less directional, leaving considerable scope for volatility in either direction. A breakdown could trigger substantial long liquidations, while a recovery could fuel short covering, amplifying price moves as leveraged positions unwind,”

Could Continued ETF Outflows Deepen BTC’s Correction?

Bitcoin has seen further weakness in institutional demand this week. Tuesday brought net outflows of $95 million from BTC spot ETFs, SoSoValue data shows, extending the withdrawal streak that began last week to four consecutive days. Should these outflows persist and gather pace through the week, BTC could face additional selling pressure and a deeper price correction.

Can Diplomatic Optimism Offer Some Support?

BTC could find near-term support from some encouraging developments. Following Tuesday’s meeting of G7 foreign ministers in Paris, US Secretary of State Marco Rubio said the economic campaign against Iran had inflicted such damage that major combat operations were not necessary at present.

US President Donald Trump has also sought to ease concerns about escalation after the midterm elections. Speaking to reporters, he described fresh US attacks on Iran as "highly unlikely" and said negotiations to end the Middle East conflict had positive momentum. Iran, meanwhile, called on the US to satisfy its demands under a plan to reopen the Strait of Hormuz.

The developments are encouraging hopes of a diplomatic breakthrough that could end the US-Iran war. By easing concerns over geopolitical risks, this could provide Bitcoin with near-term support.

Bitcoin Technical Outlook: Are Rallies Likely to Face Selling Pressure?

Trading at $73,789 at the time of writing on Wednesday, Bitcoin continues its bearish correction below the 50-day, 100-day and 200-day Exponential Moving Averages (EMAs). These averages are grouped within a range of roughly $76,400 to $78,900.

Rallies look likely to attract sellers in this configuration. On the daily chart, the Relative Strength Index (RSI) sits near 33, just above oversold territory, while the Moving Average Convergence Divergence (MACD) histogram stays negative. Together, these indicators underline continued downside pressure despite stretched short-term conditions.

Any recovery would first encounter the 200-day EMA around $76,409, ahead of the 100-day EMA near $77,481 and the 50-day EMA close to $78,895. Bulls would have to regain this tightly packed supply zone to reduce the bearish bias. Beyond it, horizontal resistance around $85,000 presents a more significant hurdle. A daily close above that level would be needed to indicate a more lasting return to a constructive medium-term trend.

With no nearby support mapped out, a break below current levels would point BTC towards the psychological support area around $70,000 before prices stabilise.

(The technical analysis of this story was written with the help of an AI tool. Know more.)