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

On-chain knowledge exhibits Bitcoin traders have been afraid to take danger not too long ago because the leverage ratio has remained low in the previous couple of days.

Bitcoin Leverage Ratio Remains Low In Past 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 value just a few days again as leverage out there is low in the meanwhile.

A related indicator right here is the “open interest,” which exhibits the full quantity of Bitcoin futures contracts presently open on all derivatives exchanges.

The “estimated leverage ratio” is a metric that’s outlined because the ratio between this open curiosity and the full 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 presently making use of.

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

Related Reading | Glassnode’s RHODL Ratio May Suggest Bitcoin Market Is Near Capitulation

On the opposite hand, low values of the ratio point out traders aren’t utilizing a lot leverage presently as they look to keep away from danger.

Now, right here is a chart that exhibits the development within the Bitcoin leverage ratio over the previous few days:

Bitcoin Leverage Ratio

Looks like the worth of the metric is low in the meanwhile | Source: CryptoQuant

As you possibly can see within the above graph, the Bitcoin leverage ratio had a excessive worth just a few days again, however the sharp uptrend within the crypto’s value introduced it again down because it liquidated shorts.

Since then, the indicator’s worth has remained at these low ranges. The open curiosity, however, is nonetheless at a excessive worth, implying traders have nonetheless been opening new positions out there.

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

These new positions, nonetheless, have low common leverage hooked up to them because the ratio suggests. This exhibits that traders have been uncertain in regards to the crypto not too long ago, opting to take much less danger.

The chart additionally exhibits the curve for the funding charges, an indicator that tells us in regards to the ratio of longs and shorts out there. Currently, the metric appears to be optimistic, which suggests there are extra lengthy positions out there.

BTC Price

At the time of writing, Bitcoin’s value floats round $47k, up 10% prior to now week. The beneath chart exhibits the development within the value of the coin during the last 5 days.

Bitcoin Price Chart

BTC's value appears to have moved sideways in the previous couple of days | Source: BTCUSD on TradingView
Featured picture from Unsplash.com, charts from TradingView.com, CryptoQuant.com

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