CryptoQuant, a crypto metrics website, has made it clear that the average leverage within Bitcoin futures trading has started to drop by the hour within the ecosystem’s leading exchanges.
Fear Brought By Great Success
The crypto space at large is the trademark place to hear a story of massive profits gained by those brave and smart enough to exploit it. Even so, with the Bitcoin in quite literally brand new price territory, even the most bullish of trader feels that little voice in his head telling him to stop and watch.
As a result, the ever-leveraged futures trading space for Bitcoin is seeing less and less of the leverage, showing that traders are scared of what might happen when they go short. The last time BTC reached an all-time high and started to drop, it caused the Crypto Winter. Understandably, people are very cautious.
CryptoQuant Highlights Lesser Leverage
CryptoQuant developed an indicator dedicated to gauging leverage, aptly calling it the Estimated Leverage Ratio. This indicator displays the open interest of any specific exchange divided by said exchange’s deposited reserve.
An excellent, simple way to show how much money people have and are otherwise leveraging. According to this indicator, CryptoQuant revealed that BitMEX, Binance, Huobi, ByBit, as well as OKEx, are all seeing a drop in total leverage. These exchanges, in turn, control a massive segment of the ecosystem’s futures trading.
With this constant drop in total leverage, it’s a safe bet to speculate that traders are starting to become cautious, thanks to this new phase of price discovery. Traders are simply not willing to risk as much anymore when they open positions, thanks to the complete absence of historical reference. This is uncharted territory, and it’s a harrowing prospect to throw your money into something you can’t accurately foresee.
Bullish And Bearish At The Same Time
There are arguments for and against Bitcoin’s monumental positive price action. The bullish side only sees the consecutive all-time highs being achieved, with the last price correction of note a fading memory in March. However, the longer the correction takes to happen, the more likely it becomes that it will occur.
It’s a ticking time bomb, with many traders fearing the upcoming correction. Eventually, these traders will want to cash out on their crypto holdings, and highly-leveraged players will find themselves in a deep red if they’re not careful.
As such, there’s an air of optimism and fear in the ecosystem. Everyone’s bullish for all these new prices, but others are afraid of climbing in just yet. Another Crypto Winter might just be around the corner.