MAC_D
[Meaning of rising Estimatied Leverage Ratio]
Estimated leverage ratio (ELR) = Open Interest / BTC All Exchange Reserves Despite the recent decline in BTC prices, ELR indicators are showing a significant rise. In general, it is known that if ELR increases, price volatility may increase. However, do not believe that volatility will continue to increase even if ELR reaches ATH. The reason is not that Open Interest, a molecule of ELR indicators, rose (increased volatility), but that the value of BTC All Exchange Reserve, a denominator, fell. This resulted in an optical illusion that the ELR value seemed to have increased relatively. Therefore, it is not right to interpret that volatility continues to expand because Open Interest has not risen. In conclusion, rather than putting meaning on the absolute rise in ELR values, it is right to interpret that when ELR reaches ATH, Open Interest decreases and volatility can occur. When the ELR value reached ATH in the chart, downward volatility continued to occur in the downward trend.