Looking at Bitcoin and Ethereum derivatives shows that they have been affected by the FTX fallout, with data analyzed by CryptoSlate showing that over 160,000 BTC has been unwound since the beginning of October.

This data indicates that roughly $3 billion worth of futures contracts have been closed out in two months.

Cryptocurrency derivatives are an important indicator of the overall health of the market. They also serve as a pointer as to where prices might head next, as they show the amount of leverage the market is sitting on.

The open interest on Bitcoin futures shows a sharp decline in the amount of funds allocated to open futures contracts, which is now back to levels recorded in July 2022.

A similar trend is also present in Ethereum derivatives. Around 2 million ETH has been unwound since October, with the open interest on Ethereum futures now back to early 2022 levels.

Aside from open interest in futures contracts, another way of estimating the amount of leverage in the market is by looking at the Estimated Leverage Ratio (ELR). The Estimated Leverage Ratio is the ratio of open interest in futures contracts divided by the reserves of corresponding exchanges. It shows how much leverage there is on exchanges and can be used to measure traders’ sentiment. A high ELR indicates an overleveraged market and incoming volatility. A low…