Binance Leverage Ratio Spurs Ethereum Volatility Risk
Ethereum recently surged to nearly $4,950 before a pullback to test key support at $4,400. On August 22, the Binance leverage ratio on ETH derivatives hit a record 0.53, pushing open interest to $12.6 billion.
Such high Binance leverage ratio often precedes forced liquidations and spikes in market volatility. After a rally above $4,800, ETH slid to its 50-day moving average at $4,400.
A sustained hold above this level could enable a move toward $5,000, while a break may trigger deeper drops to $4,350 and $4,090. Large traders have been accumulating ETH in spot and futures markets since July, and US spot Ethereum ETFs recorded 16,900 ETH inflows yesterday following last week’s 105,000 ETH outflows.
Traders should track Binance leverage ratio, open interest and key moving averages to anticipate potential deleveraging events and volatility swings.
Bearish
The record-high Binance leverage ratio and elevated open interest signal a heightened risk of forced liquidations, which may trigger sharp sell-offs and push ETH below critical support levels in the short term. While whale accumulation and ETF inflows point to sustained institutional interest, these bullish factors may be overshadowed by deleveraging events. Thus, the immediate market outlook leans bearish as traders brace for increased volatility and potential downside.