According to on-chain analytics resource CryptoQuant, while the Bitcoin price fell off a cliff over the past 24 hours, the estimated leverage ratio reached 0.224, an all-time high. The metric works by dividing exchanges’ open interest by their coin reserve. The result shows how much leverage traders are using on average.
Most cryptocurrency exchanges offer leverage trading with FTX, Huobi and Binance leading the way. They have all agreed to reduce the amount of leverage available to traders in order to prevent mass liquidation events, such as the one seen in September last year when $3.5 billion longs and shorts were liquidated.
Meanwhile, despite a circa 10% price drop over the past three days, a mere half a billion dollars worth of liquidations took place across all exchanges according to coinglass.com data , less than the $600 million worth of liquidations that took place in minutes in March last year.