Bitcoin Leverage Ratio Drops Sharply Amid Market Volatility

Crypto markets have been experiencing heightened volatility in recent times, with the Iran-US conflict contributing to investor risk-aversion. As a result, the intensity of leverage used by investors has decreased sharply, as indicated by Bitcoin's Estimated Leverage Ratio on Binance.

Since February, this ratio has dropped significantly from 0.198 to 0.152, coinciding with Bitcoin's price drop from $96,000 to $69,000. This decrease in leverage is seen as a positive sign, suggesting that spot buying rather than leveraged speculation is becoming the dominant price driver.

According to analysts, lower leverage typically means less systemic pressure, which can help stabilize price action before the market enters a new directional phase. However, it's worth noting that the Bitcoin long-term holder-to-short-term holder SOPR ratio remains at 0.89, indicating that recent buyers are underwater and LTHs are not absorbing the selling pressure.