Quant Explains How Large Bitcoin Leverage Ratio Can Help Turnaround Price

A quant has explained how the current large Bitcoin leverage ratio values can help bring a turnabout to the crypto’s price. Bitcoin Leverage Ratio Rises To Values Greater Than During The ATH As explained by an analyst in a CryptoQuant post, the massive leverage ratio right now might help BTC’s price reverse its trend. The “Bitcoin leverage ratio” is an on-chain indicator that is defined as the open interest divided by the (derivative) exchange reserve. Here, the “open interest” is a measure of the amount of futures contracts currently open in the derivatives market. While the exchange reserve tells us how much BTC is stored in exchange wallets right now. The leverage ratio basically shows the amount of leverage used by users on average. The metric’s value helps us know whether Bitcoin investors are taking a high risk or a low risk. When the value of this ratio moves up, it means investors are picking up more leverage as they are confident in their positions. On the other hand, a decreasing trend of the indicator would mean investors are reducing risk, and closing off their positions. Related Reading | Growth Of Bitcoin ETFs & Other Instruments Doesn’t Support Supply Shock Narrative Now, here is a chart that shows the trend in the Bitcoin leverage ratio over the last few months: The indicator seems to be rising in value | Source: CryptoQuant As you can see in the abo...