According to the analytical company CruptoQuant, the leverage ratio for bitcoin has reached an all-time low of 0.195, previously demonstrated in December 2021.
The leverage ratio is an indicator used by experts to assess the price volatility of digital assets in the long term. Leverage allows investors to open positions for amounts greater than their assets deposited on the exchange. In part, it is mass liquidations of traders’ stock positions that bring volatility to the market. The most notable example was the FTX exchange, which was known for its perpetual futures product offering traders leverage up to 20 times the collateral that traders claimed.
For investment activity, the declining leverage ratio means that the BTC spot market is becoming less sensitive to derivatives market activity. In turn, this demonstrates a decrease in the frequency of sharp price fluctuations, the consequences of which were massive liquidations of traders’ positions.
In general, the decrease in the leverage ratio is regarded by CryptoQuant analysts as a positive development, which indicates a more stable and resilient cryptocurrency market.
Earlier, US Senator Ted Cruz admitted that he is a bitcoin investor and regularly invests in the first cryptocurrency by capitalization.
