On-chain information reveals the Bitcoin leverage ratio has gone down just 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 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 less complicated phrases, what this metric tells us is the diploma of leverage that a mean consumer is presently 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 threat. Excessive values of the indicator might indicate that the Bitcoin market is overleveraged in the meanwhile. And thus, it could be extra vulnerable to a liquidation squeeze occasion.
Then again, low values of the metric imply traders are maintaining their positions at low threat proper now. The market is usually extra steady throughout these intervals as likelihood of deleveraging occasions decreases.
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Now, here’s a chart that reveals 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 just lately | Supply: The Glassnode Week Onchain - Week 7, 2022
As you possibly can see within the above graph, the Bitcoin leverage ratio appears to have sharply fallen off over the past seven days.
Nonetheless, not like many different deleveraging occasions over the course of 2021, this latest lower wasn’t marked by a liquidation squeeze.
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The principle push behind this pattern 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 habits in response to the numerous macro uncertainties presently looming over the Bitcoin market.
As the present values of the indicator are very near a variety that has often meant a extra steady market, the value of the crypto might not present a lot volatility within the coming days.
On the time of writing, Bitcoin’s worth 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 pattern within the worth of BTC over the past 5 days.
BTC's worth appears to have proven some sharp upwards momentum over the past twenty-four hours | Supply: BTCUSD on TradingView
Featured picture from Unsplash.com, charts from TradingView.com, Glassnode.com