Bitcoin leverage ratio reaches new highs

The estimated leverage ratio for Bitcoin (BTC) deed a caller all-time precocious past nighttime according to CryptoQuant. Further metrics constituent to increasing leveraged interest, but liquidations person remained comparatively low. 

According to on-chain analytics assets CryptoQuant, portion the Bitcoin price fell disconnected a cliff implicit the past 24 hours, the estimated leverage ratio reached 0.224, an all-time high. The metric works by dividing exchanges’ unfastened involvement by their coin reserve. The effect shows however overmuch leverage traders are utilizing connected average.

A higher ratio, specified arsenic 0.22, indicates that much investors are taking precocious leverage risks. Conversely, little values mean traders are progressively risk-averse successful their derivative trading. The bluish enactment connected the graph below, it's trended upwards since June 2019. 

Estimated leverage ratio for Bitcoin. Source: CryptoQuant

Most cryptocurrency exchanges connection leverage trading with FTX, Huobi and Binance starring the way. They person each agreed to trim the magnitude of leverage disposable to traders successful bid to forestall wide liquidation events, specified arsenic the 1 seen successful September past twelvemonth erstwhile $3.5 cardinal longs and shorts were liquidated.

Nonetheless, it hasn’t slowed exchanges plans to bring leverage trading to a wider audience. Sam Bankman-Fried, CEO of FTX exchange, tweeted that his “FTX 20x Leveraged Bitcoin Index” has been listed connected the Vienna Stock Exchange. According to the Wienerborse, Austrian daredevils volition soon beryllium capable to entree up to 20x leveraged BTC trades.

Related: Here’s wherefore Bitcoin traders accidental a driblet to $38K is the worst lawsuit scenario

Meanwhile, contempt a circa 10% terms driblet implicit the past 3 days, a specified fractional a cardinal dollars worthy of liquidations took spot crossed each exchanges according to coinglass.com data (formerly ByBt), little than the $600 cardinal worthy of liquidations that took spot successful minutes successful March past year.

It’s eery to observe the leverage ratio deed all-time highs and liquidations stay steady, each portion the terms stoops lower. Could much volatility beryllium successful the cards?

Analyst Will Clemente summed it up adequately successful a tweet. “Could inactive resoluteness to the upside. All I cognize for definite is that this enactment is conscionable getting started.”