ETH shows signs of leveraged trading recovery to pre-October 11 crash levels

ETH is showing signs of recovery in leveraged trading. As the coin stands around $3,000, the leverage ratio on exchanges is rising. 

ETH leverage has been recovering based on the exchange leverage ratio. Binance is once again the leader for the metric, signaling a return to riskier positions. As ETH traded around $3,000, traders set up new positions in expectation of a directional move. 

The ETH leverage ratio on all exchanges, and especially on Binance, has been climbing since its local lows on October 14. Currently, the ratio is back at 0.7, returning to the levels from before the October 11 crash. 

The ETH leverage ratio increased in November, signaling some traders still increased the risk on their leveraged positions. | Source: Cryptoquant

The ratio measures an exchange’s open interest divided by the coin reserve, which is a proxy for how much leverage users have on average. A growing value reveals more investors are taking directional risk through derivative trading. The spike in leverage follows a recent trading volume record for ETH on the Binance platform. 

ETH is slow to rebuild total leverage

ETH derivative trading on Binance has accelerated, as the exchange remained the leader for available liquidity. However, overall, ETH open interest remains subdued. 

In the past few days, ETH open interest recovered to over $17B, remaining within its general range. Over 74% of ETH positions are long, with most of the liquidity accumulated in long positions, below the current range. 

Despite the accumulation of liquidity on specific exchanges, as a whole, traders are more cautious. High-leverage positions also don’t grow as much as before, signaling a lower confidence in the ETH recovery. Overall, high-leveraged positions are down by around 50% compared to previous ETH bull cycles. 

ETH has slid by over 42% in the past three months, abandoning its bid to break above $5,000. At the current stage, ETH is yet to post its local bottom and start the climb back above $3,000. ETH still hovers around 0.033 against BTC, with a market cap dominance of 11.3%.

ETH price action at risk due to leveraged long positions

After the current market downturn, ETH rebuilt leveraged positions at a new price range, starting at $2,866. Based on the liquidation heatmap, over $51M in leverage is available for liquidation at that price level. 

Over $52M in positions were built around $2,857. At the current price range, most of the ETH short liquidity is accumulated right above $3,000, with a much lower probability for a short squeeze. Short sellers are a bit more aggressive on Hyperliquid, making over 43% of open interest. 

The ability of ETH to recover from its recent dip has also boosted long liquidity. At this point, ETH is still seen as potentially volatile. The Ethereum fear and greed index is at 32 points, suggesting derivative traders remain fearful.

Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.