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When the overall market leverage ratio rises to an all - time high, such as the bitcoin futures market leverage ratio exceeding 80%, it is more likely to trigger extreme market conditions. This is because a high leverage ratio means that there is a large amount of borrowed funds in the market. When the market price moves in an unfavorable direction for leveraged traders, they may be forced to liquidate their positions. A large number of liquidations can form a chain reaction, further exacerbating price fluctuations. Although it is difficult to accurately quantify the relationship between the leverage ratio and the price fluctuation range, generally speaking, the higher the leverage ratio, the greater the potential for price fluctuations. For example, if the leverage ratio is extremely high and the market has a small - scale adverse shock, it may trigger a large - scale liquidation and a significant price drop.
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