Data shows the Ethereum leverage ratio has been going up recently, something that may lead to higher volatility for the asset’s price.
Ethereum Estimated Leverage Ratio Has Risen To 23% Now
As explained by an analyst in a CryptoQuant Quicktake post, the Ethereum leverage ratio is pointing at increased risk in the market. The “estimated leverage ratio” (ELR) refers to the ratio between the Ethereum open interest and derivative exchange reserve.
The former of these, the “open interest,” keeps track of the total amount of positions that are currently open in the ETH futures market, while the latter metric, the derivative exchange reserve, simply measures the number of tokens sitting in the wallets of all centralized derivative exchanges.
The ELR basically tells us about how much leverage the average user on the futures market is currently opting for. When this indicator has a high value, it means that the open interest has a significant value compared to the exchange reserve, an
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