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Bitcoin's 'Estimated Leverage Ratio' Hits Lowest Point Since December 2021
The estimated ratio indicates how much leverage is used by traders on average, according to CryptoQuant.
Updated Apr 27, 2023, 3:06 p.m. Published Apr 27, 2023, 7:50 a.m.
A key metric gauging the use of leverage in the bitcoin market continues to slide, signaling low price volatility in the future.
Bitcoin's estimated leverage ratio, calculated by dividing the dollar value locked in the active open perpetual futures contracts by the total number of coins held by derivatives exchanges, fell to 0.195 on Wednesday, reaching the lowest since Dec. 20, 2021, per data tracked by analytics firm CryptoQuant.
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Since October the ratio has halved, indicating a sharp decline in the degree of leverage employed in the market to magnify returns.
Other things being equal, a dwindling ratio also means less sensitivity of the spot market to the derivatives market activity. In other words, episodes of liquidations-induced wild price swings, the likes of which was seen on Wednesday, may become rare going forward.
Perpetuals are futures contracts with no expiry that use the funding rate mechanism to keep prices tethered to the spot market price. Leverage allows users to open positions worth more than the money or coins deposited at the exchange. The use of leverage exposes traders to liquidations – forced unwinding of bullish long or bearish short positions due to margin shortage. Mass liquidations end up injecting volatility into the market.
A reduced bitcoin price volatility may bring more mainstream participation in the crypto market.
The estimated leverage ratio has been in free fall since Sam Bankman-Fried's FTX went bust in early November. The exchange was known for its perpetual futures product, offering leverage up to 20 times the collateral traders posted.
The continued decline in the leverage ratio suggests that bitcoin's year-to-date rally of 75% has been spot market driven. The popular assumption is that the spot market is a proxy for long-term investors, while derivatives represent institutions and sophisticated traders/speculators.
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Bilinmesi gerekenler:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
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After an active morning Tuesday, bitcoin flattened out in afternoon trading around the $87,500 area, up 2% over the past 24 hours.
What to know:
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