Estimated Leverage?
It is a ratio that measures the extent to which traders use leverage. It is calculated by dividing open contracts in the derivatives market by the Bitcoin balance on all exchanges.
In other words, the higher the ratio, the more traders are using loans (leverage) compared to their actual balance on exchanges. The market relies on borrowed capital, not real capital. This indicates that the upward momentum is driven by leverage, not actual long-term buying.
The Estimated Leverage is gradually returning to its upward trend, now at 0.273, which is relatively high compared to the correction phase. This indicates that the market contains a large number of highly leveraged positions, meaning that any sudden downward movement could lead to mass liquidations and a sharp decline, supported by high positive funding rates.
During periods of high Estimated Leverage, gains are unstable and fleeting, providing an opportunity for short speculators. It may also be an opportunity for futures traders if liquidation begins. The rising index indicates that investors still have an appetite for risk. Excessive confidence due to the breakout of the all-time high has prompted traders to enter into leveraged trades. The current phase resembles the "Euphoria Phase" of the psychological market cycle.
Written by Arab Chain
