Crypto measurement company CryptoQuant revealed that the average leverage within BTC futures trading started to decline hourly on the ecosystem’s leading exchanges.
Is it the fear of great success?
The crypto space is a place where the big stories of those brave and smart enough to exploit it come out. Even so, as Bitcoin is literally in a brand new price zone, even the bullest trader feels that little voice in his head telling him to stop and watch.
As a result, the permanently leveraged futures trading space for Bitcoin is seeing less and less leverage. The crypto winter comes to mind when BTC last hits its all-time high and starts to decline. Understandably, people are very cautious.
CryptoQuant: “Less leverage is an important detail in BTC futures”
CryptoQuant has developed an indicator that measures the leverage ratio and named it Estimated Leverage Ratio accordingly. This indicator shows the open positions of any particular exchange divided by the deposited reserve of that particular exchange.
It’s an excellent and simple way to show how much money people have and leverage out of it. According to this indicator, CryptoQuant announced that BitMEX, Binance, Huobi, ByBit and OKEx saw a decrease in total leverage. These exchanges also control a large part of the ecosystem’s futures.
With this constant decline in total leverage, it’s safe to guess that traders are beginning to be wary thanks to this new phase of price discovery. Traders no longer want to take risks when they open positions, thanks to the complete absence of historical reference. This is an unexplored territory and it can be a sad prospect to invest your money in something that you cannot accurately predict.
Bull and Bear at the same time
There are arguments for and against bitcoin’s massive positive price action. The bullish side is only that all-time highs have been reached. The sharp decline in March comes to mind at the moment. However, the longer the correction takes to occur, the more likely it is to occur.
It’s a time bomb that many traders fear the impending fix. Eventually, these traders will want to make money from their crypto assets, and highly leveraged players may find themselves in deep decline if they are not careful.
Therefore, there is an aura of optimism and fear in the ecosystem. Most are on the rise for all these new prices, but others are afraid to climb just yet. Another Crypto Winter could be just around the corner.