> For the complete documentation index, see [llms.txt](https://homepage.gitbook.io/unified/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://homepage.gitbook.io/unified/type-of-information-provided/global-markets-and-onchain-data-provided-by-unified/estimated-leverage-ratio-relative-to-price-trend.md).

# Estimated leverage ratio relative to price trend

Estimated leverage ratio is defined as the ratio of open interest divided by the reserve of an exchange.

| Estimated leverage ratio | Price trend         | Implications                                                                   |
| ------------------------ | ------------------- | ------------------------------------------------------------------------------ |
| High and rising          | Rising              | Over-leveraged long positions, potential bearish reversal                      |
| Remains high             | Falling from peak   | Traders buying the dip on leverage, exposing themselves to a long squeeze      |
| High and rising          | Falling             | Over-leveraged short positions, potential bullish reversal                     |
| Remains high             | Falling from bottom | Traders shorting the spike on leverage, exposing themselves to a short squeeze |

When estimated leverage ratio is falling, it indicates a reversal is taking place.

When estimated leverage ratio is low, it indicates that leverage levels are low (significant de-leveraging has taken place).

Sources of estimated leverage ratio data are:

* [Cryptoquant](https://cryptoquant.com/asset/btc/chart/market-indicator/estimated-leverage-ratio?exchange=all_exchange\&window=DAY\&sma=0\&ema=0\&priceScale=linear\&metricScale=linear\&chartStyle=line)
* [Glassnode](https://studio.glassnode.com/metrics?a=BTC\&category=Derivatives\&m=derivatives.FuturesEstimatedLeverageRatio)