Bitcoin

when

Here’s how the indicators related to the Bitcoin derivatives market have changed following the latest cryptocurrency crash. 
<h2 id="bitcoin-open-interest-and-estimated-leverage-ratio-have-both-dropped">Bitcoin Open Interest And Estimated Leverage Ratio Have Both Dropped</h2> 
In a CryptoQuant Quicktake <a href="https://cryptoquant.com/insights/quicktake/66b1d6599e64b626d1a3c6a2-Is-the-Crypto-Market-Deleveraged-Enough-After-Yesterdays-Crash" target="_blank" rel="noopener nofollow">post</a>, an analyst talked about how the metrics related to the derivatives market have looked like recently. The indicators in question are the Open Interest and the Estimated Leverage Ratio. 
The <a href="https://bitcoinist.com/bitcoin-open-interest-rockets-69000-rally-impact/" target="_blank" rel="noopener ">Open Interest (OI)</a> measures the number of positions related to Bitcoin currently open on all derivatives exchanges. The metric includes both short and long positions. 
When the value of this metric rises, it means the investors are opening up new positions on the market right now. Such a trend implies that interest in speculation among investors is rising. 
On the other hand, the metric going down suggests either the holders are closing up positions of their own volition or getting forcibly liquidated by their platform. 
Now, here is a chart that shows the trend in the Bitcoin OI over the past few years: 
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://i0.wp.com/img.cryptoquant.com/35320/quicktake/e5WzcyJr_2d7fec91be686bfe791ce79c88c74d6fcfb97dec1ffdb8a427908eaaf1a72ff2.png?resize=1280%2C720&amp;ssl=1" alt="Bitcoin Open Interest" width="1280" height="720" data-recalc-dims="1"> 
As is visible in the above graph, the Bitcoin OI has seen a sharp decline alongside the crash in the cryptocurrency’s price. This decline is&nbsp;due to the volatility of a<a href="https://www.newsbtc.com/bitcoin-news/crypto-liquidations-1-billion-bitcoin-crashes-52000/" target="_blank" rel="noopener nofollow">&nbsp;huge amount of liquidations</a> in the market. 
The indicator had been valued at $16.7 billion before this plunge, but it has come down to $14.2 billion. This notable decrease has brought the metric back to the same level as before, when the price’s <a href="https://bitcoinist.com/bitcoin-breaks-through-69000-setting-new-record/" target="_blank" rel="noopener ">all-time high (ATH)</a> was reached earlier in the year. 
The other indicator of interest here is the<a href="https://bitcoinist.com/bitcoin-leverage-ratio-rises-volatile-move-incoming/" target="_blank" rel="noopener "> Estimated Leverage Ratio (ELR)</a>, which keeps track of the ratio between the Bitcoin OI and the total amount of BTC sitting in the reserve of derivatives exchanges. 
This indicator tells us about the total amount of leverage that the average user on the Bitcoin derivatives market is willing to take on. Below is the chart showing how the crash changed this metric’s value. 
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://i0.wp.com/img.cryptoquant.com/35320/quicktake/75jnUVHK_3386706d9dbf0ad8bf3e3fda8ed5a15aa6a7e7d9de9dffaf803d3e6d50204433.png?resize=1280%2C720&amp;ssl=1" alt="Bitcoin ELR" width="1280" height="720" data-recalc-dims="1"> 
This metric also seems to have declined alongside the Bitcoin crash. More particularly, the ELR had been at 0.199 before the price plunge, but now it’s at 0.176. 
Historically, an overleveraged and bustling derivatives sector has led to chaos for the cryptocurrency, so decreases in the OI and ELR have resulted in a calmer market. 
As the quant explains, 
<blockquote>
 The market appears sufficiently deleveraged post-crash, potentially leading to more stability and setting the stage for a recovery, assuming other market conditions remain favorable.
</blockquote> 
<h2 id="btc-price">BTC Price</h2> 
At the time of writing, Bitcoin is trading at around $56,100, up more than 9% over the past 24 hours. 
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/ngnKD0s9/" alt="Bitcoin Price Chart" width="1534" height="854">

Bitcoin Crash: Is Derivatives Market Back At Healthy Levels Yet?

Table of Contents

Bitcoinist

Other articles published on Aug 7, 2024

Shiba Inu Tokens Soar: SHIB, BONE, LEASH Lead Market Rally

Ethereum’s Potential to Reach a New Record High in Q4 Examined

Optimistic Bitcoin Outlook for Q3: Bernstein Reports Surge in Institutional Interest

SOL Bounces from Support While TAO Surges: What’s Next for Investors?

Crypto PAC Fairshake Spends $25M to Support 18 House Candidates

Pro-Crypto Democrats Press VP Kamala Harris to Reconsider Crypto Stance

Join our free newsletter for daily crypto updates!