Executive SummaryThe market experienced a violent sell-off last week, sending BTC prices below $25k, and ending a period of historically low volatility.The market has...
Peer-to-peer crypto exchanges, which operate in a decentralized manner, have experienced a significant decline in their spot trading volumes over the past year. This...
Bitcoin (BTC) traders remain sensitive even to small price movements as data shows liquidations climbing.As BTC/USD approaches $21,600 on March 9, those who are...
What happened: Embattled crypto lender Genesis has filed for Chapter 11 bankruptcy protection. Now, the firm has made a series of transfers to crypto...
Financial freedom and inclusivity have been hot issues for many years. Nonetheless, it took Bitcoin to popularize the weird concept that a decentralized computer...
USDC, USDP and GUSD Vaults Affected
DAI degens beware.MakerDAO, the largest DeFi protocol with $6.4B in total value locked (TVL), has said it will liquidate...
Whether you like it or not, crypto hasn’t yet taken over the world. In most places, fiat currency is used for the majority of financial transactions. This means that not all of your funds can go into crypto since you’ll need some cash to pay for your expenses. Yes, you could sell your crypto whenever […]
On-chain data shows the Bitcoin leverage ratio has continued to stay at high values despite the recent decline in the crypto’s price. Bitcoin Leverage Ratio Hasn’t Budged Much In Response To Price Plunge As pointed out by an analyst in a CryptoQuant post, the BTC leverage ratio has remained at high values recently, despite the price declining to $41k. The “estimated leverage ratio” is an indicator that’s calculated by dividing the open interest with the exchange reserve. In simpler terms, what this metric tells us about is how much leverage Bitcoin futures investors are using at the moment. Here, “open interest” is the measure of the total amount of futures contracts open on derivatives exchanges. And the “exchange reserve” is the total amount of coins currently present in wallets of all derivative exchanges. When the value of the Bitcoin leverage ratio goes up, it means investors have started to add more leverage to their positions. On the other hand, a decline shows futures holders are closing up their positions. This may be due to mass liquidations or because of investors opting to take less risk right now. A mass liquidation event (often called a long or short squeeze) occurs when the price of Bitcoin makes a sharp swing, leading to a cascade of liquidations in the market. Now, here is a chart that shows the trend in the indicator over the past week: Looks like the ratio has been at high values recently | Source: CryptoQuant As you can see in the above graph, while the price of the coin has gone down, the leverage ratio has remained at high values. Related Reading | Bitcoin Prices Dragged Down By Geopolitical Tensions, Ukraine Nuke Plant Fire The open interest has also declined slightly, which means there are fewer positions open currently. This implies that the average leverage per position has actually gone up. The quant in the post believes that this trend may show that Bitcoin investors are now getting bolder and taking more risks. Since the funding rate is about neutral right now (another indicator that can help us estimate the ratio between longs and shorts), it implies there are about as many long positions as short positions. Related Reading | Bitcoin Bearish Signal: Exchanges Observe Huge Inflow From Long-Term Holders The price action in the near future may be of interest as a sharp move in either direction can cause a squeeze and push the value of Bitcoin further in that direction. BTC Price At the time of writing, Bitcoin’s price floats around $41.4k, up 5% in the last week. BTC's price seems to have plunged down over the past day | Source: BTCUSD on TradingView Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com
The current Bitcoin volatility Index values suggest that a short squeeze may be near, if past pattern continues to hold. Past Bitcoin Volatility Index Pattern Suggests A Short Squeeze May Happen Here As explained by an analyst in a CryptoQuant post, the BTC volatility index has now reached values where a short squeeze has happened in the past. The “volatility index” is an indicator that shows how much the price of Bitcoin has fluctuated in a day compared to its historical average. When the value of this metric rises, it means the crypto’s price has recently seen higher volatility as its price has deviated more from its average. On the other hand, low values suggest Bitcoin has been relatively stable lately as the price hasn’t seen any large movements. Volatility is often high following a liquidation event. These “liquidation squeezes” happen when the market is overleveraged, and so any big swings in the price lead to mass liquidations of futures positions. Related Reading | Bitcoin Bearish Signal: Binance Observes Massive Inflow Of 10k BTC The price usually crashes during a long liquidation squeeze due to a cascading effect by these liquidations. On the contrary, the price may instead jump up during a short squeeze. Now, here is a chart that shows the trend in the Bitcoin volatility over the past six months: The index's value seems to have risen and subsequently fallen recently | Source: CryptoQuant As you can see in the above graph, the indicator’s value shot up recently following a long squeeze, but has now come back down. At the moment, the Bitcoin liquidation index seems to have values of around 19.12. In the chart, the quant has highlighted past portions that are relevant to this current trend. It looks like shortly following such a formation, the price has made a strong move up with a short squeeze. Related Reading | ‘Bitcoin Rush’: Small-Time Solo Miners Strike Gold With Full BTC Blocks The analyst thus thinks that the coin may follow this pattern now as well, and its price may go back to $46k to $47k. However, the quant believes that such a move will only be short term relief, and Bitcoin will resume the downtrend soon after. BTC Price At the time of writing, Bitcoin’s price floats around $36.2k, down 5% in the last seven days. Over the past month, the crypto has lost 28% in value. The below chart shows the trend in the price of BTC over the last five days. BTC's price seems to have moved sideways in the last few days | Source: BTCUSD on TradingView A few days back, the price of Bitcoin jumped back to $38k, but the recovery didn’t last long and the crypto fell down to $36k. Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com
