Leverage Ratio: A ticking time bomb waiting to explode ๐ฃโณ
Do you feel the market is "heavy" despite positive news? The reason might be that everyone is gambling with borrowed money!
๐ก What is the Estimated Leverage Ratio (ELR)?
It is an indicator that measures the amount of open contracts (Open Interest) compared to the balance available on the platforms.
High ratio: means that traders are using high leverage (High Leverage). The market here becomes very "fragile". ๐ฅ
Low ratio: means that the market is "clean" and most traders are buying "cash" (Spot). This is a healthy market. โ
โ ๏ธ "Liquidation Cascade" scenario:
When leverage rises to record levels, a slight drop of just 2% is enough to force the closure of Long positions, causing the price to drop further, leading to the closure of other positions.. and so we see long red candles bleeding. ๐ฉธ๐
๐ฏ Summary:
Donโt get swept away by FOMO when the indicator is at historical levels. The market always needs a "flush" to clear out the gamblers before it continues its real rise. ๐งน
๐ Question: Have you ever experienced liquidation due to leverage? Share your experience to warn others.
$BTC
$ETH
$SOL
#StrategyBTCPurchase
#MarketRebound
โ ๏ธ DYOR - Not Financial Advice - High leverage is high risk.
Do you feel the market is "heavy" despite positive news? The reason might be that everyone is gambling with borrowed money!
๐ก What is the Estimated Leverage Ratio (ELR)?
It is an indicator that measures the amount of open contracts (Open Interest) compared to the balance available on the platforms.
High ratio: means that traders are using high leverage (High Leverage). The market here becomes very "fragile". ๐ฅ
Low ratio: means that the market is "clean" and most traders are buying "cash" (Spot). This is a healthy market. โ
โ ๏ธ "Liquidation Cascade" scenario:
When leverage rises to record levels, a slight drop of just 2% is enough to force the closure of Long positions, causing the price to drop further, leading to the closure of other positions.. and so we see long red candles bleeding. ๐ฉธ๐
๐ฏ Summary:
Donโt get swept away by FOMO when the indicator is at historical levels. The market always needs a "flush" to clear out the gamblers before it continues its real rise. ๐งน
๐ Question: Have you ever experienced liquidation due to leverage? Share your experience to warn others.
$BTC
$ETH
$SOL
#StrategyBTCPurchase
#MarketRebound
โ ๏ธ DYOR - Not Financial Advice - High leverage is high risk.