Bitcoin’s implicit leverage ratio (BTC) reached a new all-time high last night, according to CryptoQuant. Other indicators point to increased interest in borrowing, but the settlement rate is still relatively low.
According to network analyst CryptoQuant, while the price of bitcoin has fallen in the last 24 hours, the calculated leverage rate has reached 0.224, the highest level ever. The scale works by dividing the open interest of the stock exchanges by the supply of currencies. The result shows what influence traders use on average.
A higher ratio, for example 0.22, indicates that more investors are taking on higher lending risk. On the contrary, lower values mean that traders are increasingly risk-averse when trading derivatives. The blue line in the chart below has an upward trend since June 2019.
Calculated leverage ratio for bitcoin. Source: CryptoKvant
Most cryptocurrency exchanges offer geared trading, with FTX, Huobi and Binance at the forefront. They all agreed to reduce the amount of influence available to traders to prevent massive liquidations such as the one that occurred in September last year when $ 3.5 billion long and short positions were liquidated.
However, this has not slowed down the stock exchange’s plans to bring gired trading to a wider audience. Sam Bankman-Fried, CEO of FTX, tweeted that “Bitcoin FTX 20x Leveraged Bitcoin Index” has been listed on the Vienna Stock Exchange. Austrian daredevils will soon be able to access bitcoin traders with up to 20x influence, according to Wienerborse.
Related: Here’s why Bitcoin traders say that a drop to $ 38,000 is a worst case scenario
Meanwhile, despite a nearly 10% drop in prices over the past three days, according to data from coinglass.com (formerly ByBt), all exchanges have only half a billion dollars in liquidation, less than 600 million dollars in filters that occurred in a matter of seconds. Minutes in March last year.
It is frightening to see the leverage ratio reach record levels and the settlement remains stable while the price falls below it. Maybe there are more twists on the cards?
Analyst Will Clemente summed it up adequately in his tweet: “He can still determine growth. All I know for sure is that this party has just begun.