Bitcoin's estimated leverage ratio, which measures the degree of leverage employed in the market to magnify returns, has continued to decline, reaching its lowest level since December 20, 2021. The ratio, calculated by dividing the dollar value locked in active open perpetual futures contracts by the total number of coins held by derivatives exchanges, has halved since October, signaling low price volatility in the future. A reduced bitcoin price volatility may attract more mainstream participation in the crypto market. The declining ratio suggests that bitcoin's year-to-date rally of 75% has been driven by the spot market rather than institutions and sophisticated traders/speculators who use derivatives.
(By Omkar Godbole)
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