Bitcoin Leverage Ratio Hits New ATH, Market In For A Rough Ride?

On-chain data shows the Bitcoin leverage ratio has surged up to a new all-time high, suggesting the market could be heading towards high volatility.

Bitcoin All Exchanges Estimated Leverage Ratio Sets New ATH

As pointed out by a CryptoQuant post, 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.

What this metric tells us is the average amount of leverage currently being used by investors in the BTC futures market.

When the value of this indicator is high, it means users are taking a lot of leverage right now. Historically, such values have led to higher volatility in the price of the crypto.

On the other hand, the value of the metric being low suggests investors aren’t taking high risk at the moment, as they haven’t used much leverage.

Now, here is a chart that shows the trend in the Bitcoin leverage ratio over the last few years:

Looks like the value of the metric has been rising up during the last few months Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com

On-chain data shows the Bitcoin leverage ratio has surged up to a new all-time high, suggesting the market could be heading towards high volatility.

Bitcoin All Exchanges Estimated Leverage Ratio Sets New ATH

As pointed out by a CryptoQuant post, 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.

What this metric tells us is the average amount of leverage currently being used by investors in the BTC futures market.

When the value of this indicator is high, it means users are taking a lot of leverage right now. Historically, such values have led to higher volatility in the price of the crypto.

Related Reading: Bitcoin Cash Price: Investors Must Avoid These Levels To Prevent Losses

On the other hand, the value of the metric being low suggests investors aren’t taking high risk at the moment, as they haven’t used much leverage.

Now, here is a chart that shows the trend in the Bitcoin leverage ratio over the last few years:

Looks like the value of the metric has been rising up during the last few months