Bitcoin's Open Interest and Estimated Leverage Ratio Decline Post Crash
CryptoNewsTerminal Staff06 Aug, 2024
Bitcoin's Open Interest and Estimated Leverage Ratio Decline Post Crash
CryptoQuant contributor IT Tech analyzed that Bitcoin futures open interest and estimated leverage ratio (ELR) have declined significantly compared to before the price crash. This means that the leverage has been sufficiently liquidated. Assuming that other environments remain favorable, an atmosphere for the market to recover will be created. A decline in open interest suggests that traders are reducing their exposure to the market, while a decline in ELR indicates that they are reducing their use of leverage. This suggests that traders are becoming more cautious and less bullish on Bitcoin. It is important to note that this analysis is based on on-chain data, which only provides a partial view of the market. Other factors, such as macroeconomic conditions and regulatory changes, could also impact the price of Bitcoin. However, the decline in open interest and ELR is a sign that the market is becoming less leveraged and more cautious, which could lead to a period of consolidation or even a recovery.
