As a reminder, a leveraged position is buying or selling a cryptocurrency on an exchange using its leverage. In this case, if the price of the asset moves in an unfavorable direction to a predetermined level, the exchange can resort to liquidation - forced closing of the position and return of the collateral. You can read more about all of these processes in our article, where we also shared our own experience with this trading instrument.

What happens in the cryptocurrency market

The leverage ratio is calculated as the result of dividing the cryptocurrency reserves of the exchange by the volume of open positions on it. Both traders’ funds and the exchange’s funds are taken into account when calculating the volume of open positions. This week, the metric reached an all-time high of around 0.244 units.

It should be noted that the higher the value of the coefficient, the greater the share of leveraged positions in the total volume of open positions on the exchange. This means that at this moment traders are ready to take more risks, as margin trading always implies a risk of position liquidation – as well as an opportunity to earn more.

Growth in the estimated leverage ratio for Bitcoin

According to Cointelegraph, even the fall in the price of Bitcoin in recent weeks has not affected the volume of liquidations – for example, over the past three days, their value was half a billion dollars. That’s not much, considering the liquidation counter used to count billions of dollars of closed positions in a matter of minutes during sharp market crashes.

The numbers are growing, not just in trading, but also in the fundamental utility of cryptocurrencies. According to Chainalysis experts, the volume of digital asset transactions in 2021 is up 567 per cent year-on-year. In just 12 months, cryptocurrency users transferred around $15.8 trillion in cryptocurrencies.

Rise in ‘criminal’ transactions

Unfortunately, it wasn’t without some sad news. With the rise in popularity of crypto, the activity of fraudsters has also skyrocketed. In 2021, cryptocurrency wallets associated with fraudsters “earned” more than $14 billion in crypto. By comparison, in 2020, they “earned” only $7.8 billion, almost half as much.

Accordingly, the 2021 result is a record. This means that fraudsters have never "earned" so much in the coin niche.

Share of “criminal” transactions in the total volume of cryptocurrency transfers

However, as a percentage of total transactions, the share of “criminal” transactions has reached a historic low in 2021. As noted by Chainalysis, this is due to the fact that analytical platforms have “learned” to more accurately identify the addresses of criminals and form a general idea of their activities.


It is important to note that the lion's share of the revenue for criminals came from fraud, i.e. trivial deception of coin owners. The most popular scheme in this case is the promise of doubling the amount of cryptocurrency sent. The initial sending of funds by the victim is needed ostensibly to confirm the address, but in fact, this is where it all ends.

Fraudsters receive money to their address, then start moving coins between addresses to cover their tracks, or simply don't interact with the address for a long time.


Cryptocurrency scammer


We believe the traders' behaviour hints that Bitcoin may have bottomed out after its recent collapse. Accordingly, the lower the BTC rate slumps, the greater the temptation for traders to open a long position with borrowed funds, as these actions would bring more profit in case of growth.

However, it's impossible to be sure of anything in the cryptocurrency market. Therefore, we recommend that you still control your risks and don't invest in coins that you can't afford to lose.


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