Bitcoin Futures Market Remains Heated As Leverage Stays High

On-chain data shows that the Bitcoin futures market has been hot lately as the leverage taken by investors has been very high.

Bitcoin Estimated Leverage Ratio Drops A Bit, But Still Very High

After the surge in derivatives activity, leverage in the market has reached a whole new high recently, noted an analyst at CryptoQuant. Mail.

The “All exchanges estimated leverage ratio“It is an indicator that is defined as the ratio between open interest and the derivative exchange reserve.

When the value of this metric is high, it means that the average investor is currently using a large amount of leverage on the exchanges. This trend indicates that stockholders are willing to take high risks at the moment.

On the other hand, the lower values ​​of the index indicate that the shareholders are moving towards a lower risk approach at the moment because they are not using a lot of leverage.

Now, here is a chart showing the trend in Bitcoin across all exchanges and the estimated leverage ratio over the past two years:

Bitcoin leverage ratio

The value of the metric seems to have rapidly risen during the last few weeks | Source: CryptoQuant

As you can see in the chart above, Bitcoin’s estimated leverage ratio has been on the rise in recent weeks and reached an all-time high for a short time.

However, the index’s value has declined slightly since then. This drop came due to the recent temporary surge in volatility in the market due to CPI versionresulting in the disposal of a large amount of leverage.

However, the value of the index remained very high despite the decline, which means that there is still a lot of leverage in the market.

Historically, over-leveraged markets usually ended up with very sharp price movements as liquidations tended to happen quite easily in such environments.

Such liquidation inflates the price action that it caused, which leads to further liquidation. This event in which the filters creep together is called a squeezing.

Since the leverage is very high in the Bitcoin futures market at the moment, it is likely that pressure will occur and the price of BTC will break out of range.

As for which direction the pressure might go, quantitative comments: “With individual traders overly optimistic compared to institutional traders, the risk and reward does not look good for the bulls.”

BTC price

At the time of writing, the price of Bitcoin is hovering around $19.1K, down 2% in the past seven days.

Bitcoin price chart

Looks like the value of the crypto has once again gone stagnant after the CPI volatility | Source: BTCUSD on TradingView
Featured image from Kanchanara on, charts from,

Leave a Comment

Your email address will not be published. Required fields are marked *