Bitcoin All Exchanges Estimated Leverage Ratio Sets New ATH
As pointed out by a CryptoQuant , the funding rate has remained neutral while the leverage has increased in the market.The “all exchanges estimated leverage ratio” is an indicator that measures the ratio between the Bitcoin open interest and the derivative exchange reserve.
Looks like the value of the metric has been rising up during the last few months | Source:As you can see in the above graph, the Bitcoin estimated leverage ratio has shot up recently and has attained a new ATH. This means that investors are taking a high amount of leverage on average.
Liquidations cascading together in such a way is called a “squeeze.” Such events can involve either longs or shorts.
The Bitcoin funding rates (the periodic fee exchanged between long and short traders) can give us an idea about which direction a possible squeeze may go in. CryptoQuant notes that this metric has a neutral value currently, implying the market is equally divided between shorts and longs. As such, it’s hard to say anything about the direction a possible squeeze in the near future might lean towards.The Bitcoin volatility has in fact been very low in recent weeks, but with such high accumulation of leverage, it may be a matter of time before a volatile price takes over.
BTC Price
At the time of writing, Bitcoin’s price floats around $19.6k, up 2% in the past week.The BTC value continues to trend sideways | Source:
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com