With a leverage ratio of 0.57, Ether’s is more than double Bitcoin’s record.

Ether is gaining traction as the primary cryptocurrency for traders looking to boost returns through leverage, positioning itself as a key player compared to Bitcoin. While Bitcoin remains the focus for many institutional investors, Ethereum’s ether (ETH) has become the token of choice for traders eager to enhance their positions via leveraged trading.

On Wednesday, Ether’s leverage ratio surged to a new high of 0.57, up from 0.37 at the beginning of Q4 2024, according to data from CryptoQuant. The leverage ratio is determined by dividing the total open interest in futures contracts (both standard and perpetual) by the total amount of ETH held in wallets tied to exchanges offering these futures products.

A rising leverage ratio signals that more traders are using borrowed capital, indicating increased market speculation and risk appetite. Leverage allows traders to control larger positions with less capital. For example, a 10:1 leverage ratio enables a trader to control $10,000 worth of an asset with only $1,000 in margin. While leverage can amplify profits, it also increases the potential for significant losses and raises the risk of liquidations, which occur when a position is closed due to insufficient funds, often leading to heightened market volatility.

With Ether’s leverage ratio exceeding 0.5, it’s clear that a substantial portion of trading activity in the futures market is driven by leveraged positions relative to the actual ETH available in exchange wallets. This level of leverage is notably higher than Bitcoin’s, which currently stands at 0.269. Although this marks the highest leverage ratio for Bitcoin since early 2023, it remains well below the 0.36 peak recorded in October 2022.

Given these trends, it’s likely that Ether could experience greater price fluctuations compared to Bitcoin in the near future, potentially seeing double the volatility in the market.