Ethereum Faces Risk As Binance Leverage Ratio Skyrockets To Record Levels

Ethereum is at a decisive moment after a turbulent week of ￰0￱ a powerful surge on Friday that pushed the price into new highs, ETH quickly faced selling pressure, leading to a sharp drop by Monday. Now, the asset is trying to stabilize above the $4,400 level, a critical zone that bulls must defend to prevent further downside ￰1￱ Reading: Bitcoin CEX Netflows Still Green Despite Large Sellers Rotating To Ethereum The recent volatility highlights how fragile sentiment can become at major turning ￰2￱ bulls remain optimistic that ETH can sustain momentum and push toward the long-awaited $5,000 mark, bears argue that the market structure suggests more downside could follow if support ￰3￱ to this uncertainty, analyst Darkfost has issued a warning about rising risks in the derivatives ￰4￱ to his analysis, the Binance Estimated Leverage Ratio (ELR) on ETH has reached its highest levels ever recorded, signaling extreme risk ￰5￱ ELR measures how heavily leveraged positions have become relative to overall open ￰6￱ leverage skyrockets, markets often experience heightened ￰7￱ taking on excessive risk can trigger forced liquidations, amplifying price swings in both ￰8￱ ETH now sitting at a fragile support level, the combination of leverage buildup and recent price swings makes the coming days critical for Ethereum’s short-term ￰9￱ Leverage Risks Grow on Binance According to Darkfost, the Estimated Leverage Ratio (ELR) is one of the most reliable indicators to measure whether a market is becoming dangerously ￰10￱ ELR combines Open Interest data with overall market activity to highlight the extent to which traders are relying on borrowed funds to amplify their ￰11￱ data shows that Open Interest on Binance just hit a new all-time high of $12.6 billion on August 22, reflecting record speculative ￰12￱ context, back in July 2020, the ELR on Binance was just 0.09, a relatively safe level.

Today, that figure has skyrocketed to 0.53, marking the highest reading ever ￰13￱ a sharp increase suggests that traders are entering positions with unprecedented ￰14￱ explains that when leverage climbs to these extremes, the short-term market outlook becomes ￰15￱ optimism often leaves participants vulnerable to forced ￰16￱ liquidations cascade, they can magnify price swings far beyond what would happen in a spot-driven ￰17￱ heavy institutional and whale accumulation in Ethereum, Binance remains the largest hub for trading ￰18￱ derivatives volumes outweighing spot activity, leveraged positioning now has the power to dictate short-term price ￰19￱ that this spike in leverage comes just as Ethereum has broken above its all-time high, the risk of a deleveraging event is ￰20￱ an event could temporarily drive ETH lower, wiping out leveraged positions before the market regains balance.

Yet, many analysts believe this would act as a reset, ultimately paving the way for Ethereum to retest and potentially surpass the $5,000 level, which remains the key target for ￰21￱ Reading: Ethereum Whale Demand Surges On Binance As Price Nears $5,000 Holding Key Support Amid Selling Pressure Ethereum is currently showing signs of fragility after its strong rally last ￰22￱ this 4-hour chart, ETH trades around $4,426, holding near a crucial support zone defined by the 50-day moving average (blue line) at roughly $4,451. Price action shows a sharp rejection from highs above $4,800, followed by a steep retracement that now challenges short-term ￰23￱ $4,400 region has emerged as an immediate support level, where ETH is attempting to stabilize.

A sustained hold above this area could allow bulls to regroup and attempt another push toward the $4,800–$5,000 resistance zone, which remains the next psychological target. conversely, if the $4,400 level fails, ETH could slide toward the 100-day moving average (green line) around $4,350, with further downside risk toward the 200-day average (red line) near $4,090. Related Reading: Ethereum Faces High-Risk Setup: Leverage-Driven Rallies Signal Volatility The structure still favors bulls in the broader trend, but the recent correction highlights the market’s sensitivity to leverage and short-term ￰24￱ traders, the $4,400 level is key: holding above it keeps the bullish continuation alive, while a breakdown may trigger deeper profit-taking.

Overall, ETH remains in an uptrend, but volatility at these levels demands ￰25￱ image from Dall-E, chart from TradingView