Data Shows Bitcoin Investors Afraid To Take Risk As Leverage Remains Low
31 Marzo 2022 - 1:00PM
NEWSBTC
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
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