The leverage ratio is an indicator used by experts to estimate the volatility of digital asset prices over the long term.
Leverage allows investors to open positions in amounts greater than their assets deposited on the exchange.
In part, it is the mass liquidations of traders’ stock positions that bring volatility to the market.
The most prominent example was the FTX exchange, which was known for its perpetual futures product that offered traders leverage up to 20 times greater than the collateral stated by traders.
For investment activities decreasing leverage ratio means: the spot FX market becomes less sensitive to the activity of the derivatives market.
In turn, this demonstrates a decrease in the frequency of sharp price fluctuations, the consequence of which was the mass liquidation of positions of traders.
In general decrease of leverage ratio is regarded by analysts of CrüptoQuant as a positive event, which indicates a more stable and steady market of cryptocurrencies.
Earlier, U.S. Senator Ted Cruz admitted that he is a bitcoin investor and regularly invests in the first by capitalization cryptocurrency.