On-chain information reveals the Bitcoin leverage ratio has gone down lately as market de-risks amid macro uncertainties.
Bitcoin Leverage Ratio Sharply Falls Down Over The Previous Week
In accordance with the newest weekly report from Glassnode, the BTC futures open curiosity leverage ratio has decreased within the final week as traders de-risk their holdings.
The “futures open interest leverage ratio” is an indicator that’s outlined because the ratio between the market open contract worth and the full market cap of Bitcoin.
In less complicated phrases, what this metric tells us is the diploma of leverage that a median person is at present making use of within the BTC market.
When the worth of the ratio will increase, it means customers are growing their leverage as they tackle extra danger. Excessive values of the indicator could suggest that the Bitcoin market is overleveraged in the meanwhile. And thus, it might be extra susceptible to a liquidation squeeze event.
However, low values of the metric imply traders are conserving their positions at low danger proper now. The market is mostly extra secure throughout these intervals as chance of deleveraging occasions decreases.
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Now, here’s a chart that reveals the development within the Bitcoin futures open curiosity leverage ratio over the previous yr:
Seems like the worth of the indicator has declined lately | Supply: The Glassnode Week Onchain - Week 7, 2022
As you may 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 principle push behind this development appears to have been traders opting to de-risk their holdings by closing out their futures positions.
The report notes that futures customers could also be exhibiting this conduct in response to the various macro uncertainties at present looming over the Bitcoin market.
As the present values of the indicator are very near a spread that has often meant a extra secure market, the worth of the crypto could not present a lot volatility within the coming days.
On the time of writing, Bitcoin’s price floats round $44.2k, up 2% within the final seven days. Over the previous month, the crypto has gained 3% in worth.
The beneath chart reveals the development 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