CryptoQuant warns that an increase in ETH’s leverage ratio signals increased volatility in the asset, as well as an increased likelihood of liquidation of exchange positions.

According to experts from the analytical platform CryptoQuant, the second largest cryptocurrency by capitalization is under close attention of investors and traders due to the increase in the estimated leverage ratio (ELR).


This is an important benchmark that demonstrates the relationship between open interest rates and an asset’s foreign exchange reserves, providing information about the health and future volatility of a cryptocurrency.

The first of these, “open interest,” tracks the total amount of positions that are currently open in the ETH futures market. The second indicator, the exchange derivatives reserve, measures the number of ETHs held in the wallets of participants on all centralized exchanges.

“ETH’s ELR is currently 23%, a value that cannot be ignored. In this sense, Ether may be heading towards a period of increased turbulence,” said CryptoQuant experts.

As the analysts explained, whenever the ELR increased, the price of the cryptocurrency was more likely to exhibit volatility. High leverage means that the average contract becomes more susceptible to potential liquidations. As a result, a large number of liquidations occurring simultaneously can lead to investor panic and affect the volatility of the asset.

Earlier, cryptocurrency analyst Benjamin Cowen said on the Ethereum Outlook YouTube channel that the second largest cryptocurrency by capitalization may be on the verge of “extreme price swings,” suggesting a fall to $400.