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

On-chain information reveals Bitcoin traders have been afraid to take danger lately because the leverage ratio has remained low in the previous couple of days.

Bitcoin Leverage Ratio Stays Low In Previous Few Days

As identified by an analyst in a CryptoQuant post, traders haven’t taken a lot danger for the reason that surge within the crypto’s worth a couple of days again as leverage available in the market is low in the intervening time.

A related indicator right here is the “open curiosity,” which reveals the entire quantity of Bitcoin futures contracts at the moment open on all derivatives exchanges.

The “estimated leverage ratio” is a metric that’s outlined because the ratio between this open curiosity and the entire quantity of cash current on all derivatives exchanges (alternate reserve).

What this ratio tells us is the common quantity of leverage that every Bitcoin futures investor is at the moment making use of.

When the worth of the indicator is excessive, it means customers are taking over plenty of danger proper now. Such values may end up in larger worth volatility.

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Then again, low values of the ratio point out traders aren’t utilizing a lot leverage at the moment as they give the impression of being to keep away from danger.

Now, here’s a chart that reveals the pattern within the Bitcoin leverage ratio over the previous few days:

Appears to be like like the worth of the metric is low in the intervening time | Supply: CryptoQuant

As you’ll be able to see within the above graph, the Bitcoin leverage ratio had a excessive worth a couple of days again, however the sharp uptrend within the crypto’s worth introduced it again down because it liquidated shorts.

Since then, the indicator’s worth has remained at these low ranges. The open curiosity, alternatively, remains to be at a excessive worth, implying traders have nonetheless been opening new positions available in the market.

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These new positions, nevertheless, have low common leverage hooked up to them because the ratio suggests. This reveals that traders have been not sure concerning the crypto lately, opting to take much less danger.

The chart additionally reveals the curve for the funding charges, an indicator that tells us concerning the ratio of longs and shorts available in the market. At present, the metric appears to be optimistic, which suggests there are extra lengthy positions available in the market.

BTC Worth

On the time of writing, Bitcoin’s worth floats round $47k, up 10% previously week. The beneath chart reveals the pattern within the worth of the coin over the past 5 days.

BTC's worth appears to have moved sideways in the previous couple of days | Supply: BTCUSD on TradingView

Featured picture from Unsplash.com, charts from TradingView.com, CryptoQuant.com