Bitcoin ELR Falls Fastest Since China Ban Amid Geopolitical Tensions

On June 23, CryptoQuant revealed a sharp shift in market behavior. The Estimated Leverage Ratio (ELR) dropped to -0.25 in just three days. This marks the steepest deleveraging event since the notorious 2021 China Ban, which took nearly a month to reach similar levels. The sudden pace of this decline has alarmed crypto traders, suggesting growing caution and a major pullback in risk. Many now wonder if this rapid drop signals deeper market stress or a setup for recovery.

ELR Crash Mirrors China Ban, but Much Faster

The China Ban in 2021 saw ELR dip to -0.35, a level only reached over a full month. In contrast, this recent drop to -0.25 happened in just 72 hours. That speed reflects a stronger, more sudden shock to market confidence. According to Darkfost on CryptoQuant, this sharp decline is tied directly to macro uncertainty. 

Source: CryptoQuant X Post on June 23, 2025

Tensions between the US and Iran, along with heightened regional risks, appear to have driven this quick exit from leveraged positions. Liquidations surged, but more notably, many traders chose to close their positions voluntarily. This shows fear is now outweighing greed, a clear shift in market sentiment.

China Ban Levels Signal Investor Anxiety and Market Reset

The Estimated Leverage Ratio falling to China Ban levels suggests more than just liquidations, it signals a shift in investor psychology. Traders are reducing risk and pulling back, even if prices appear to recover slightly. When leveraged positions vanish, Open Interest declines. This often leaves the market in a temporarily quieter state, vulnerable to sudden price movements. Such scenarios increase short-term risk, especially for those hoping to capitalize on leveraged trades. But moments like these, though chaotic, have historically created strong foundations for future rallies. A reset in leverage can reduce market froth and build healthier price structures.

Quiet Consolidation Offers Hope Beyond the Chaos

While fear is visible in the short term, long-term indicators are painting a calmer picture. Bitcoin recently dropped to $98,000 before rebounding above $100,000. Despite bearish noise, on-chain data remains stable. The Binary CDD 30-day moving average peaked around 0.6, far below the 0.8 threshold that usually signals overheating. 

Source: CryptoQuant X Post on June 23, 2025

According to analyst Avocado Onchain, long-term holders are not selling. This indicates quiet consolidation, a phase where the market gathers strength. During the China Ban, a similar calm preceded one of Bitcoin’s strongest recoveries. This phase may not be a collapse, but a pause before another rally.

China Ban Parallels Hint at Next Bitcoin Breakout

The market is showing patterns reminiscent of the China Ban period, but with important differences. Back in 2021, panic was triggered by regulatory crackdowns and mining bans in China. Today, the fear comes from geopolitical risk and global market instability. But the effect, rapid deleveraging and investor retreat, feels very familiar. 

Historically, Bitcoin thrives when attention fades and the noise dies down. The current silence in long-term holder behavior could set the stage for another leg up. While risk remains elevated, history suggests that these moments of fear often precede major price surges. Right now, comparing current patterns with history offers an optimistic outlook. As market volatility increases, investors need to be cautious and find opportunity in the quiet.