On-chain information exhibits the Bitcoin leverage ratio has gone down not too long ago as market de-risks amid macro uncertainties.
Bitcoin Leverage Ratio Sharply Falls Down Over The Previous Week
Based on the most recent weekly report from Glassnode, the BTC futures open curiosity leverage ratio has decreased within the final week as buyers de-risk their holdings.
The “futures open curiosity leverage ratio” is an indicator that’s outlined because the ratio between the market open contract worth and the whole market cap of Bitcoin.
In easier phrases, what this metric tells us is the diploma of leverage that a mean consumer is at the moment making use of within the BTC market.
When the worth of the ratio will increase, it means customers are rising their leverage as they tackle extra threat. Excessive values of the indicator might suggest that the Bitcoin market is overleveraged in the intervening time. And thus, it could be extra susceptible to a liquidation squeeze occasion.
Alternatively, low values of the metric imply buyers are protecting their positions at low threat proper now. The market is usually extra steady throughout these durations as chance of deleveraging occasions decreases.
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Now, here’s a chart that exhibits the pattern within the Bitcoin futures open curiosity leverage ratio over the previous 12 months:
Appears to be like like the worth of the indicator has declined not too long ago | Supply: The Glassnode Week Onchain - Week 7, 2022
As you’ll be able to see within the above graph, the Bitcoin leverage ratio appears to have sharply fallen off during the last seven days.
Nevertheless, not like many different deleveraging occasions over the course of 2021, this current lower wasn’t marked by a liquidation squeeze.
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The primary push behind this pattern seems to be to have been buyers opting to de-risk their holdings by closing out their futures positions.
The report notes that futures customers could also be displaying this habits in response to the numerous macro uncertainties at the moment looming over the Bitcoin market.
As the present values of the indicator are very near a variety that has normally meant a extra steady market, the worth of the crypto might not present a lot volatility within the coming days.
On the time of writing, Bitcoin’s value floats round $44.2k, up 2% within the final seven days. Over the previous month, the crypto has gained 3% in worth.
The under chart exhibits the pattern within the value of BTC during the last 5 days.
BTC's value appears to have proven some sharp upwards momentum during the last twenty-four hours | Supply: BTCUSD on TradingView
Featured picture from Unsplash.com, charts from TradingView.com, Glassnode.com