For context, the ELR measures the amount of leverage traders are using in the Bitcoin futures market by comparing open interest to the amount of BTC held on exchanges. In the Quicktake post, the education group highlighted that the ELR had surged toward 14.9% — a sign that traders are increasingly borrowing capital to maintain their bullish exposures.
XWIN Research Japan noted that although high leverage can boost prices in the near-term, “healthy bull markets are usually driven by spot demand.” According to the analytics firm, current conditions only increase the Bitcoin market’s vulnerability to sudden liquidation events.
Notably, there have been significant surges in both Open Interest and Funding Rates, reflecting an overwhelming presence of long positions. XWIN Research Japan pointed out that this could be a dangerous scenario, as “long positions are now increasingly exposed to downside volatility” following Bitcoin’s recent move to $82,000, also driven by sell-side liquidity.
Interestingly, all of these are ongoing, as US-based institutions seem to be on a hiatus (as reflected in a prolonged negative reading of the Coinbase Premium). More shockingly, US Spot Bitcoin ETFs saw almost $1 billion in capital outflows over the past week, according to XWIN Research Japan.
Liquidity Still On The Sidelines: Research GroupDespite these conditions, XWIN Research emphasized that the market remains definitely bearish. According to the group, Bitcoin Long-term Holders hold more than 15 million BTC, with more than 316,000 BTC entering the market over the past month.
Furthermore, XWIN Research highlighted a concurrently growing liquidity pool on Binance (the world’s leading crypto exchange by trading volume), as reflected in its stablecoin inflows. Ultimately, the research institute highlighted the $78K–$79K range, which overlaps with the STH Realized Price.
