The futures market has undergone a massive reduction in leveraged positions—comparable to what was observed during the Bitcoin mining ban in China, shared CryptoQuant contributor known as Darkfost.

“The Estimated Leverage Ratio (ELR) indicator dropped to a critical level of -0.25 within three days. This underscores the fundamental impact of geopolitical tensions, particularly the conflict between the U.S. and Iran, on investor behavior and overall market dynamics,” the expert noted.

ELR Indicator Dynamics. Data: CryptoQuant.
For comparison, the ELR fell to -0.35 during the “China ban” in May–June 2021.

“However, that took a whole month,” the researcher emphasized.

According to him, the rapid decline of the indicator points to a swift reduction in open interest. The reason is not only liquidations but also the “voluntary closing of positions by traders seeking to reduce risk.”

“Such a sharp drop in ELR reflects the dominance of bearish sentiment and short-term anxiety. However, it is often in such moments that new opportunities emerge,” noted Darkfost.

In the near future, the analyst expects increased market volatility, so “using leverage involves elevated risks.”

As a reminder, analyst Omkar Godbole has identified who is actively selling Bitcoin above the $100,000 mark.