At 0.57, Ether’s leverage ratio has reached a historic high, more than twice that of Bitcoin.

Ether is increasingly becoming the top choice for traders who want to boost returns through leverage, distinguishing itself from Bitcoin in the major cryptocurrency market. While Bitcoin often captures the attention of institutional investors, Ethereum’s ether (ETH) is the preferred asset for those looking to maximize profits using leveraged trading strategies.

On Wednesday, Ether’s leverage ratio reached a new peak of 0.57, a significant rise from 0.37 at the beginning of Q4 2024, according to data from the analytics firm CryptoQuant. The leverage ratio is calculated by dividing the total open interest in futures contracts (both standard and perpetual) by the amount of ETH held in exchange wallets that offer futures trading.

An increase in the leverage ratio indicates that traders are using leverage more frequently, which suggests a growing trend of risk-taking and speculative activity in the market. Leverage allows traders to control larger positions with a smaller capital investment. For example, with a leverage ratio of 10:1, a trader can control $10,000 worth of an asset with just $1,000 in margin. While leverage can amplify both profits and losses, it also heightens the risk of liquidations, which can occur when a trader’s position is automatically closed due to insufficient margin, contributing to heightened market volatility.

Ether’s leverage ratio above 0.5 suggests a considerable amount of leveraged trading in the futures market relative to the number of actual coins held in exchange wallets. This level of leverage is notably higher than Bitcoin’s, which has a leverage ratio of 0.269 at the time of writing. Though this is the highest Bitcoin leverage ratio since early 2023, it remains much lower than the record high of 0.36 recorded in October 2022.

Given these conditions, it wouldn’t be surprising if ether sees greater price volatility than Bitcoin in the near term, potentially experiencing twice the market fluctuations.