@joycejimmy
In high-volatility regimes, leverage concentrates unevenly: retail participants often display higher nominal leverage ratios and clustered positions near perceived support/resistance, while institutional desks tend to manage lower gross leverage but larger notionals. Volatility spikes lead to margin calls and rapid deleveraging, which can cascade into sharp liquidations. Liquidity providers widen spreads and reduce quoted sizes, exacerbating market impact. Risk-weighted measures (leveraged notional per active trader, funding-rate sensitivity) increase and remain elevated until volatility normalizes. Monitoring exchange-level leverage metrics, the skew of margin requirements, and concentration of open interest helps anticipate fragility and the potential for violent deleveraging loops.
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