XRP is seeing a sharp increase in leverage on Binance.
It has raised the risk of larger price swings.
According to data shared by CryptoQuant, Binance’s XRP estimated leverage ratio has climbed to approximately 0.213, its highest level in more than seven months.
The indicator measures the amount of leverage that is used relative to exchange reserves. It shows a significant increase in traders’ appetite for risk.
Traders are willing to use borrowed funds to establish larger XRP positions.
Bullish and bearish implications
A CryptoQuant contributor has noted that the increase could have both bullish and bearish implications.
If higher leverage is accompanied by rising XRP prices and open interest, it could indicate growing confidence and the opening of new positions.
However, elevated leverage can also make the market significantly more vulnerable to liquidations.
XRP is currently trading around $1.46, down nearly 3% over the past 24 hours. Open interest stands at roughly $3.62 billion, with Binance accounting for about $2 billion.
Growing liquidations
Liquidations have also picked up alongside the recent pullback. Approximately $18.9 million worth of XRP positions were liquidated over the past 24 hours, with long positions accounting for about $15 million of that total.
The derivatives market is heavily skewed toward long positions. Binance’s XRP long/short ratio by accounts stands at roughly 2.41, while the ratio among top traders is above 2, indicating a strong preference for bullish exposure.