Binance XRP leverage ratio falls to 3-month low as risk aversion rises

Binance’s estimated leverage ratio for XRP has fallen to around 0.14, the lowest level in the past three months, according to CryptoQuant contributor Arab Chain. The estimated leverage ratio measures the degree of leverage used in the derivatives market relative to exchange reserves. A lower reading indicates traders are reducing the size of positions funded by borrowed money relative to available reserves. Arab Chain said this may be linked to liquidations of existing leveraged positions, broader risk aversion amid downward pressure on XRP prices, and weakening demand for leverage. The decline in the leverage ratio may be interpreted as a positive sign for derivatives-market stability, as it could reduce the risk of large-scale forced liquidations caused by excessive leverage and ease the market’s sensitivity to sharp price swings.