Bitcoin’s Comeback or Bull Trap? Analysts Warn of ‘Excessive Optimism’

8 August 2025

Bitcoin’s recent price action has drawn renewed attention as the asset attempts to rebound from last week’s decline. Following its July peak above $123,000, BTC experienced a downturn, hitting lows around $112,000 over the weekend.

However, the latest data now suggest a gradual recovery in progress, with the cryptocurrency trading above $116,000 at the time of writing.

Despite this modest rebound, some analysts are warning that underlying market sentiment could be pointing to a potential correction. Recent insights from contributors on the CryptoQuant QuickTake platform highlight signs of increasing optimism among traders, particularly on Binance.

The balance between long and short positions is showing a distinct bias toward the long side, a pattern historically associated with short-term reversals.

Sentiment Indicators Raise Red Flags on Binance

CryptoQuant analyst BorisVest recently discussed how sentiment on Binance, based on long-short positioning, has shifted notably into positive territory. According to BorisVest, the platform’s sentiment metric has shown a surge in long positions as BTC moved from $112,000 to $115,000.

He noted that such spikes often coincide with price corrections. “The clustering of green bars in the sentiment chart suggests that traders are increasingly expecting prices to rise. However, excessive optimism tends to be countered by market corrections,” he explained.

Bitcoin sentimanet analysis: long vs short positions.

The analyst added that Binance, given its dominant share in trading volume, provides valuable insight into broader trader behavior. When the long position concentration grows during price increases, it may indicate a potential round of profit-taking.

BorisVest stated that a meaningful correction would likely require BTC to fall below the $110,000 mark, which could offer more favorable re-entry points for buyers while restoring balance to the market structure.

Bitcoin Leverage Data Shows Mixed Signals for Recovery

In a related post, another CryptoQuant analyst, Arab Chain, examined the ongoing decline in Binance’s leverage ratio. Typically, a reduction in leverage is interpreted as a signal that overleveraged traders are exiting the market, thereby reducing volatility and risk of forced liquidations.

Bitcoin estimated leverage ratio on Binance

“Lower leverage suggests less speculative behavior in the short term,” Arab Chain noted, “which often contributes to more stable price action.”

However, Arab Chain also pointed out that both leverage and price have been falling in tandem, which may reflect weak demand from spot buyers. This combination indicates that the recent downturn lacks sufficient buying support, raising concerns about the strength of Bitcoin’s current recovery.

Bitcoin (BTC) price chart on TradingView

Featured image created with DALL-E, Chart from TradingView

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