According to data from CryptoQuant, Bitcoin’s (BTC) estimated leverage ratio (ELR) has fallen to -0.25 over just three days. The figure represents the lowest the ELR has been since China banned mining in 2021. The sharp dip in the ELR figure signals a decline in leveraged positions and open interest. The development could point to market participants closing positions to reduce risk exposure.
Bitcoin Heading For A Big Dip?
The cryptocurrency market has faced a steep correction over the last few days. According to CoinGlass data, $623.83 million was liquidated from the crypto market over the last 24 hours.
Bitcoin (BTC) faces risks of falling below $100,000. BTC’s price has dipped 1.4% in the daily charts, 5.2% in the weekly charts, 5.5% in the 14-day charts, and 7.1% over the previous week. Despite the correction, the original crypto has rallied 57.6% since June 2024.
The market correction comes amid increased volatility arising from geopolitical tensions and trade wars. The US launched its attack on Iran, joining Israel’s cause. The move has led to a substantial dip in investor sentiment. Many anticipate a prolonged bearish environment.
The Federal Reserve has also decided not to cut interest rates after its latest FOMC meeting. The decision to keep rates unchanged may have also affected Bitcoin’s (BTC) price movements.
Will The Asset Recover?
Bitcoin (BTC) is the crypto market leader. While the current market environment does not inspire confidence, there is a chance that BTC will rebound over the coming weeks.
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The current ELR reading is the lowest since China banned crypto mining in 2021. One thing to remember is that the market rose to never-before-seen levels later that year. We could see a similar pattern emerge this time around as well if market conditions allow.