Bitcoin Leverage Ratio Hits New ATH, Is More Price Decline Coming?

On-chain data shows Bitcoin leverage ratio has hit a new all-time high (ATH). This may mean that a price correction could soon follow. Bitcoin Leverage Ratio Reaches New Highs, Correction Incoming? As pointed out by an analyst in a CryptoQuant post, the BTC leverage ratio has made a new ATH recently. This increases the possibility of a correction happening soon to flush out all the excess leverage. The “all exchanges estimated leverage ratio” is an indicator that estimates how much leverage is used by Bitcoin investors on derivatives exchanges, on average. There are two related metrics here. The first is the “open interest,” which measures the total amount of futures contracts currently open in the market. And the other is the “exchange reserve” that tells us how much BTC is stored in derivatives exchange wallets. The value of the leverage ratio is calculated as the open interest divided by the exchange reserve. With the help of this metric, it becomes possible to tell whether investors are currently taking low risk or high risk. When the value of the indicator rises, it means investors are taking on more leverage. High values of the metric may mean the market is currently over-leveraged, which could lead to higher volatility in Bitcoin. Related Reading | Quant Explains How Large Bitcoin Leverage Ratio Can Help Turnaround Price On the other hand, low values of the indicator imply there ...