Investors are avoiding risks, bullish momentum is insufficient, and Bitcoin leverage is hovering at a low level

After breaking through $48,000 earlier this week, Bitcoin fell back for the second consecutive day. Bitpush terminal data shows that as of press time, Bitcoin is trading at $45,699, down 2.69% in 24 hours. On-chain data shows that Bitcoin leverage has been low in recent days, suggesting that investors are reluctant to increase leverage to risk betting on market trends.

CryptoQuant analysts noted that investors have not taken on much risk since the cryptocurrency price surged a few days ago. A relevant indicator is "open interest," which shows the total amount of Bitcoin futures contracts currently open on all derivatives exchanges.

Another metric is “estimated leverage,” defined as the ratio between open interest and the total amount of tokens on all derivatives exchanges (exchange reserves), representing the average amount of leverage currently used by each Bitcoin futures investor.

When the indicator's value is high, it means that users are now taking a lot of risk, which can lead to higher price volatility. A low value for the ratio indicates that investors are not currently using much leverage because they want to avoid risk.

The above chart shows that Bitcoin leverage remained high a few days ago, but the sharp upward trend in the price of the cryptocurrency caused it to fall back when short positions were liquidated. Since then, the value of this indicator has remained at a lower level. On the other hand, open interest remains high, which means that investors are still opening new positions in the market.

However, the average leverage of these new positions is low. This shows that investors are uncertain about cryptocurrencies recently and choose to take less risk. The chart also shows the funding rate curve, which indicates the ratio of longs and shorts in the market. Currently, the indicator seems to be positive, which means that there are more long positions in the market.

Edward Moya, senior market analyst at Oanda, believes: "The bullish momentum for Bitcoin has certainly lost steam, and ongoing geopolitical risks may limit any near-term rebound. Bitcoin appears poised to consolidate here and could easily fall to the $44,500 level."

Moya said that while Bitcoin adoption is increasing and interest is growing, it will take time to drive a stable long-term upward move. “For Bitcoin, the path higher will be a slow climb as many traders will also be looking at other coins that are in the early stages of growth,” he said.