The recent Bitcoin gains are arguably due to leverage orders.
On November 4, the crypto data website Crypto Quant has a chart published on which the estimated lever ratio is displayed on https://the-bitcoin-billionaire.com. The ratio is calculated by dividing the open interest by the Bitcoin (BTC) reserves and this has reached a new all-time high.
This record was set on November 3rd after the Estimated Leverage Ratio (ELR) on Binance surged above 0.18 for the first time due to a surge in open interest. Shortly thereafter, Bitcoin hit a double bottom at around $ 13,400.
New data suggests that the Bitcoin surge to its annual high of over $ 14,000 may have been fueled by leverage. That, in turn, could mean that the market could remain very volatile in the short term.
Estimated Leverage Ratio on Binance: CryptoQuant
However, Binance also saw its largest daily BTC outflow on November 3rd. Here, 58,861 Bitcoin within 24 hours flown by the Exchange.
Binance was not alone with such a surge. Data from Skew shows that total open interest in BTC futures has hit a new all-time high at around $ 5 billion.
The growing open interest has been seen despite BitMEX’s recent decline in market share . The US Department of Justice accused the exchange of money laundering.
According to Messari, the rise in open interest could indicate a “bullish sentiment” provided that it is due to long positions. The research firm said also, the data would suggest that new capital could flow into the crypto area:
“Rising prices during an uptrend combined with rising open interest could mean that new money is flowing into the market.”
The amount of BTC on the stock exchanges has also steadily declined since May . This could indicate that buyers are withdrawing Bitcoin from the exchanges and putting them in cold storages for the longer term.
There have also been more and more long positions on Bitfinex since the beginning of October . The number of these has increased from 25,000 to 29,000. Although more short positions have been opened since October 20, these have doubled from 3,250 to 6,770, the bulls clearly have the upper hand.
In the past few hours, BTC has hit a new annual high of $ 14,500.