Skip to main content

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 see in the above graph, the Bitcoin leverage ratio had a high value a few days back, but the sharp uptrend in the crypto’s price brought it back down as it liquidated shorts.

Since then, the indicator’s value has remained at these low levels. The open interest, on the other hand, is still at a high value, implying investors have still been opening new positions in the market.

Related Reading | Time To Be Fearful? Bitcoin Index Reaches Greediest Point Since Peak

These new positions, however, have low average leverage attached to them as the ratio suggests. This shows that investors have been unsure about the crypto recently, opting to take less risk.

The chart also shows the curve for the funding rates, an indicator that tells us about the ratio of longs and shorts in the market. Currently, the metric seems to be positive, which means there are more long positions in the market.

BTC Price

At the time of writing, Bitcoin’s price floats around $47k, up 10% in the past week. The below chart shows the trend in the price of the coin over the last five days.

BTC's price seems to have moved sideways in the last few days | Source: BTCUSD on TradingView Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

from NewsBTC https://ift.tt/tVe7zMK
via IFTTT

Labels

Labels:

Comments

Post a Comment

Any questions, Please.

Popular posts from this blog

Five Bitcoin Price Charts Analyzing The Dramatic Q1 2022 Conclusion

There are only hours remaining until the Q1 2022 close in Bitcoin price action. With the important quarterly candle set to close tonight, let’s look at what technicals might say about the direction of the next quarter. Q1 2022 Comes To A Close For Bitcoin The first quarter of a year, often sets the tone for the year to come. In investments, a poor Q1 performance is indicative of a bad year ahead. Considering the fact that Bitcoin price is now above $45,000 after touching $32,000 this quarter, it is tough to say the performance has been “poor” by anything other than crypto standards. Related Reading | Bitcoin Weekly Momentum Flips Bullish For First Time In 2022 The cryptocurrency has recovered nearly 40% from the low, leaving a long wick behind. Such a long wick suggests that before the quarter came to a close, buyers stepped up in a major way. Buyers were able to step up in a larger capacity in Q1 2022 than bears were able to in the final quarter of last year. The bearish wick to cl...
Post a Comment
Read more

ENS DAO delegates offer perspective on DAO governance and decentralized identity

AlphaWallet CEO and Spruce co-founder talk about their roles as contributors to the Ethereum Name Service following the project's recent airdrop. Earlier this month, the Ethereum Name Service, or ENS, formed a decentralized autonomous organization, or DAO, for the ENS community.  Cointelegraph spoke to two ENS DAO delegates who applied for the opportunity to represent the community and stay involved in the decision making process: Victor Zhang, CEO of AlphaWallet, an open source Ethereum wallet, and Gregory Rocco, co-founder of Spruce, a decentralized ID and data toolkit for developers. Zhang spoke about his experience as an external contributor to ENS and an early supporter since 2018. Zhang initially sought to help ENS by offering Alpha Wallet as a user-friendly tool for  resolving .eth names and cryptocurrency wallet addresses. Essentially, if a user inputs an .eth name in the AlphaWallet, it will show the wallet address, and vice versa using reverse resolution. Alpha...
Post a Comment
Read more

FTX hacker reportedly transfers a portion of stolen funds to OKX after using Bitcoin mixer

On-chain activity suggests that the hacker has sent at least 225 BTC (4.5 million) to OKX so far. Hackers who drained FTX and FTX USA of over $450 million worth of assets just moments after the doomed crypto exchange filed for bankruptcy on Nov. 11, continue to move assets around in an attempt to launder the money.  A crypto analyst who goes by ZachXBT on Twitter alleged that the FTX hackers have transferred a portion of the stolen funds to the OKX exchange, after using the Bitcoin mixer ChipMixer. The analyst reported that at least 225 BTC — worth $4.1 million USD — has been sent to OKX so far.  1/ Myself and @bax1337 spent this past weekend looking into the FTX attacker’s deposits to ChipMixer. It appears they’ve likely been transferring a portion of the stolen FTX funds to OKX after withdrawing from CM So far we’ve accounted for at least $4.1m (255 BTC) sent to OKX pic.twitter.com/C46JZWtktn — ZachXBT (@zachxbt) November 29, 2022 According to ZachXBT, the FTX h...
Post a Comment
Read more