Bitcoin’s high leverage ratio reaches new highs as narrow range limits profitability

ambcrypto.com:

Bitcoin [BTC] just kicked off another week with its price restricted within a narrow range. What comes next and how soon will it come? These are some of the questions that many investors are curious about. Latest observations such as a new high for BTC’s leverage ratio may change the dynamics in the coming days.

One of Bitcoin’s most interesting observations this week was the rise in its estimated leverage ratio. The latter managed to reach a new historic high on 9 October despite a bearish performance in the last five days. This observation confirmed that many BTC investors may have embraced leveraged trades.

Source: CryptoQuant

The high leverage ratio was not that surprising considering that BTC was trading close to its 2022 lows. Also, the narrow price range translated to limited profitability. This encouraged many Bitcoin traders to execute leveraged positions in the hopes of boosting their profits.

While traders stood to gain more through leverage, they also took up higher risks in case the trend went against them. The outcome may also have a sizable impact on the price. For example, leveraged long liquidations may trigger more sell pressure while leveraged short liquidations may trigger more bullish pressure.

In the current scenario, BTC’s derivatives funding rates were down significantly. Despite this, whales have been accumulating since early October, even though the impact on price was limited. This may have encouraged a higher affinity for leverage. The Purpose Bitcoin ETF was also accumulated substantially from 6 October.

Source: Glassnode

The dormant circulation metric dropped significantly indicating that less selling of HODLed BTC was taking place. Despite this, a slight drop in the addresses with balance greater