Ethereum’s derivatives market is flashing a warning sign, with data from Binance showing the coin’s estimated leverage ratio (ELR) climbed to a record 0.5617 on November 19, while the spot price drifted around $3,000.
Experts suggest that this combination of extreme leverage and flat price action makes the cryptocurrency vulnerable to a sharp move in either direction.
Record Leverage Meets Flat Price as Liquidity Resets
According to analytics platform Arab Chain, the current all-time high level of ETH’s ELR, which is a measure of the amount of borrowed capital in use within the market, points to an unusually crowded derivatives space.
The situation is particularly striking because it is happening while the price of Ethereum shows minimal volatility, hovering in a narrow band between $3,000 and $3,160 over the past day. In simple terms, traders are using more leverage than ever before to open both long and short positions, even though the price itself is not trending strongly.
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