Bitcoin’s Estimated Leverage Ratio (ELR) data on Binance indicates that the market is undergoing a sensitive period characterized by a significant decline in leverage compared to previous weeks. The ratio currently stands at 0.163, a level below the average recorded over the past few months, when leverage exceeded 0.18 and even reached much higher peaks. This decline reflects a gradual reduction in leverage, indicating a clear sense of caution among traders, especially after the sharp volatility Bitcoin has experienced in recent weeks.
This decrease in leverage coincides with Bitcoin trading around $92,000, suggesting that the recent gains were not driven by intense derivatives pressure but rather by a reduced reliance on leveraged positions. Such a decrease in leverage is often interpreted as a positive sign for the market in the medium term, reflecting improved liquidity quality and a move away from excessive risk that could lead to sharp sell-offs in the event of any sudden price movement.
The data also indicates a clear decrease in leverage-related volatility compared to previous periods, suggesting that traders are becoming more cautious, either closing highly leveraged positions or reducing their risk exposure. This behavior is typical when the market experiences strong downward pressure or a change in the overall trend, as investors prefer to wait for greater clarity before re-entering aggressively.
With the price remaining near the $90,000–$95,000 range, the continued decline in leverage could provide a more stable base that would help Bitcoin establish a new upward trend if momentum indicators and trading activity improve.
Written by Arab Chain
