Data Shows Bitcoin Investors Afraid To Take Risk As Leverage Remains Low

On-chain data shows Bitcoin investors have been afraid to take risk recently as the leverage ratio has remained low in the last few days. Bitcoin Leverage Ratio Remains Low In Past Few Days As pointed out by an analyst in a CryptoQuant post, investors haven’t taken much risk since the surge in the crypto’s price a few days back as leverage in the market is low at the moment. A relevant indicator here is the “open interest,” which shows the total amount of Bitcoin futures contracts currently open on all derivatives exchanges. The “estimated leverage ratio” is a metric that’s defined as the ratio between this open interest and the total amount of coins present on all derivatives exchanges (exchange reserve). What this ratio tells us is the average amount of leverage that each Bitcoin futures investor is currently making use of. When the value of the indicator is high, it means users are taking on a lot of risk right now. Such values can result in higher price volatility. Related Reading | Glassnode’s RHODL Ratio May Suggest Bitcoin Market Is Near Capitulation On the other hand, low values of the ratio indicate investors aren’t using much leverage currently as they look to avoid risk. Now, here is a chart that shows the trend in the Bitcoin leverage ratio over the past few days: Looks like the value of the metric is low at the moment | Source: CryptoQuant As you can ...