Prediction/Analysis

Is Bitcoin going bearish? Leverage ratio is a sell signal

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The Bitcoin leverage ratio currently shows a sell signal. This indicates that the market could become bearish in the near future.

The Bitcoin Leverage Ratio says that now is not a good time to buy bitcoins

One CryptoQuant pointed this out PublishThe estimated leverage ratio shows that this may not be a good time to buy Bitcoin.

The open interest ratio divided with the reserves of all exchanges can be used to calculate the estimated Bitcoin leverage ratio.

Estimated leverage ratio = Open interest ÷ Amount of reserve

For those new to futures trading, “open interest” refers to the total number of contracts held by users at the end of a trading day. The total amount of Bitcoin in all exchanges’ wallets is called the reserve.

The leverage ratio indicator shows how much leverage an average trader uses. The metric’s value increases and traders feel more confident about their positions.

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The opposite is true if the indicator’s value shows a downward trend. These trends allow traders to identify whether they are taking high-risk or low-risk trades.

Here’s how the latest Bitcoin leverage chart looks:

Source:| Source: CryptoQuant

The chart above shows that the indicator’s movement can be used as a way to predict where the BTC price will go next.

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A lower leverage ratio is generally a sign of a good buy point. However, its rising value has indicated otherwise throughout the year.

The current value of the metric has been increasing. This means that it is not a good moment to buy more Bitcoin. However, the coin could soon experience a short-term correction.

BTC price

Bitcoin’s current price is $ 50.9,000. This is a 6% increase over the previous 7 days. The crypto has experienced a 13% gain in value over the last month.

The chart below shows how the coin’s prices have changed over the past three-months.

Bitcoin Price Table

 Source: BTCUSD on| Source: BTCUSD on TradingView

BTC seems to finally have risen above the $50,000 price mark after struggling for a while just below it.

Yesterday Bitcoin was close to hitting $ 53,000, but the price has fallen dramatically since then and now hovers below $ 51,000

If the leverage ratio is any indication BTC could see a bearish trend and a downtrend very soon. This will likely be a short-term correction, as other indicators still point to crypto being bullish long term.


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