<div id="readability-page-1"><div>At the beginning of February, the price of Bitcoin tumbled to a new low not seen since US President Donald Trump got elected in November 2024. This downside volatility is believed to have been precipitated by the overleveraging in the BTC market at the time. According to the latest on-chain data, the Bitcoin derivatives market has witnessed a massive flush-out over the past week.BTC Market Now At Reduced Risk Of Liquidation Cascades In a fresh Quicktake post on the CryptoQuant platform, trader CryptoOnchain revealed a dramatic flush-out in the Bitcoin derivatives market on Binance, the world’s largest crypto exchange by trading volume. The relevant indicator here is the Estimated Leverage Ratio (ELR), which has seen a significant decline in recent weeks.The Estimated Leverage Ratio is an on-chain metric that measures the ratio of open interest and the reserve of an exchange (Binance, in this case). This indicator tracks the average amount of leverage used by traders in a particular market or exchange. A high ELR value typically implies elevated market risk, signaling that small price movements could potentially lead to significant liquidations and further price movements.As reported by NewsBTC in late January, the ELR was at an extremely high level of around 0.1980, indicating an overheated and highly speculative market. Following the crash of the Bitcoin price, the on-chain metric has also cooled off, falling to around 0.1414.<figure></figure>According to CryptoOnchain, this 28% decline in the Estimated Leverage Ratio highlights a shiftbin market dynamics. The market quant said that the drop in ELR suggests that a severe deleveraging event has occurred, with the accompanying price decline causing the closure of several overleveraged long positions.CryptoOnchain added:While the immediate price action was painful, wiping out excess leverage is fundamentally healthy. It removes the “derivatives bubble” and leaves the market structure much lighter and less susceptible to extreme, sudden volatility.The crypto analyst concluded that the risk of further liquidation cascades is reduced, now that the Estimated Leverage Ratio has fallen to normal levels. However, the Bitcoin market needs organic buying pressure and genuine demand from the spot market to rebuild a bullish structure and resume a sustainable upward trend.Bitcoin Price OverviewAs of this writing, the price of BTC sits around $67,950, reflecting an almost 2% jump in the past 24 hours. According to data from CoinGecko, the premier cryptocurrency is still down by more than 1% on the weekly timeframe.<figure></figure></div></div>

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Bitcoin's price recently fell to a low not seen since November 2024, driven by overleveraging in the market. The Estimated Leverage Ratio (ELR) on Binance dropped 28%, indicating a significant deleveraging event. This decline suggests reduced risk of liquidation cascades, as the market becomes less susceptible to volatility. Currently, Bitcoin is priced at approximately $67,950, showing a slight increase in the last 24 hours but still down over 1% weekly. Analysts emphasize the need for organic buying pressure to foster a sustainable upward trend.

- The price of Bitcoin fell to a new low in early February, attributed to overleveraging in the market.  
- On-chain data indicated a significant drop in the Estimated Leverage Ratio (ELR), from 0.1980 to 0.1414, suggesting a deleveraging event in the Bitcoin derivatives market.  
- Despite a recent price increase to approximately $67,950, the market requires organic buying pressure to establish a sustainable upward trend.

Bitcoin Market Resets With 28% Deleveraging — What Next?