Bitcoin Leverage Ratio Rises: Volatile Move Incoming?

Data  is showing the Bitcoin estimated leverage ratio rising which just may signal volatility incoming. Current price is $22,115.

Bitcoin Leverage Ratio Rises, Volatile Move Incoming?

As an analyst in a CryptoQuant post pointed out, the open interest has also shown a small increase in the last few hours. The “open interest” here is an indicator that measures the total amount of contracts that are currently open on the Bitcoin futures market. The metric accounts for both short and long contracts.

Another relevant metric is the “estimated leverage ratio,” which measures the ratio between the open interest and the total amount of BTC currently sitting on derivative exchanges. This indicator tells us how much leverage future market users are taking on average.

When the ratio has a high value, the average investor has taken on a large amount of leverage right now. Such a trend suggests users feel bold and take on high risks. Historically, overleveraged markets have generally followed up with increased price volatility.

On the other hand, low indicator values imply users aren’t taking on that much leverage at the moment. Naturally, market conditions like these have involved low asset value volatility.

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Master Asked on March 8, 2023 in Bitcoin.
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