Bitcoin Estimated Leverage Ratio Declines A Bit, But Still Remains Very High
Following the rise in derivative activities, the leverage in the market hit a new all-tine high recently, as noted by an analyst in a CryptoQuant .The “all exchanges estimated leverage ratio” is an indicator that’s defined as the ratio between the open interest and the derivative exchange reserve.
The value of the metric seems to have rapidly risen during the last few weeks | Source:As you can see in the above graph, the Bitcoin estimated leverage ratio had been rising in recent weeks and hit a new all-time just a while ago.
However, since then the indicator’s value has come down a bit. This decrease was instigated by the recent temporary rush of volatility in the market due to the CPI release, which flushed out a large amount of leverage.
Such liquidations amplify the price move that caused them, leading to even more liquidations. This event where liquidations cascade together is called a squeeze.
Since leverage is so high in the Bitcoin futures market right now, a squeeze could likely take place and break BTC’s price out of the range. As for which direction the squeeze might go in, the quant comments: “With retail traders overly bullish compared to institutional traders, the risk-reward does not look good for the bulls.”BTC Price
At the time of writing, Bitcoin’s price floats around $19.1k, down 2% in the last seven days.Looks like the value of the crypto has once again gone stagnant after the CPI volatility | Source:
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com