Ethereum futures leverage hits all-time high, analyst warns

The leverage level in the Ethereum (ETH) futures market has reached an all-time high, raising concerns about increased market volatility, according to an analysis by CryptoQuant contributor Carmelo Alemán. Alemán noted that the Estimated Leverage Ratio for Ethereum climbed to a record 0.9949 over the weekend. This indicates that futures open interest has expanded to a level nearly equivalent to 99% of the total ETH supply held on exchanges. The metric, which shows the ratio between the size of futures positions and exchange-held ETH reserves, is a key indicator of leverage exposure. He explained that when the leverage ratio rises to such extreme levels, the market structure becomes fragile, and relatively small price fluctuations can trigger a cascade of large-scale liquidations. As a result, Alemán concluded that there is a high probability of a sharp increase in short-term volatility.