According to crypto analysts, the volatility risk in Bitcoin (BTC) increases in parallel with the amount of leveraged position.
Hyblock Capital focused on the $58,500 level, which is a high leverage liquidity zone in the Bitcoin market. It was interpreted that this zone could increase volatility by investors taking more risks.
The increase in leverage ratios signaled a revival of investors' risk appetite and an expectation of higher volatility.
The estimated leverage ratio for Bitcoin has risen to 0.2060, the highest level since October 2023, according to data provided by analytics firm CryptoQuant.
The increase came after rates have been below 0.20 for months and showed that investors were strengthening their futures holdings by using more debt.
Lower rates generally reflected a more cautious investor approach. Leverage peaked after the collapse of Sam Bankman-Fried’s FTX exchange and trended downward through December 2023.
Leverage allows investors to open large positions with little capital, and it has an effect that magnifies both gains and losses.
However, if market positions reverse, investors may face collateral shortages and forced liquidations, which in turn trigger price volatility.
“The recent increase in Bitcoin’s estimated leverage ratio suggests that investors are turning to higher leverage in the derivatives market,” CryptoQuant said.
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