Crypto Leverage Ratio [Market Cap / Open Interest in %]

19 Apr 2023

This indicator calculates what percentage of market cap data corresponds to open interest data.
Leverage Ratio = 1/(Market Cap / 100 * Open Interest)


Market Cap data comes from TradingView -> CRYPTOCAP:YOURCOINSYMBOL
Open Interest data comes from IntoTheBlock -> INTOTHEBLOCK:YOURCOINSYMBOL_PERPETUALOPENINTEREST

IntoTheBlock refresh perpetual data at the end of the day. It means there is no intraday data.
It can only be used in Daily or higher time intervals.

This indicator and any other indicator can not precisely calculate real leverage ratio except exchanges itself. This calculation is just based on assumption.

You can see the exact same result by just adding:

1/(CRYPTOCAP:BTC/100*INTOTHEBLOCK:BTC_PERPETUALOPENINTEREST)

to your symbol search, if your chart is a BTC chart.

"
The Futures Open Interest Leverage Ratio is calculated by dividing the market open contract value, by the market cap of the asset (presented as %). This returns an estimate of the degree of leverage that exists relative to market size as a gauge for whether derivatives markets are a source of deleveraging risk.

High Values indicate that futures market open interest is large relative to the market size. This increases the risk of a short/long squeeze, deleveraging event, or liquidation cascade.

Low Values indicate that futures market open interest is small relative to the market size. This is generally coincident with a lower risk of derivative led forced buying/selling and volatility.

Deleveraging Events such as short/long squeezes, or liquidation cascades can be identified by rapid declines in OI relative to market cap, and vertical drops in the metric.

-glassnode
"
says glassnode. I think it is more than that. Especially with MAs.