BlackRock’s (BLK) application for an exchange-traded spot bitcoin fund (ETF), filed last month, brought new optimism to the crypto market and pushed bitcoin (BTC) as well as related investment vehicles up.

Still, traders on the bitcoin perpetual futures market are risk-averse and unwilling to use high leverage.

Glassnode’s and Blockware Solutions’ data shows that the ratio of BTC perpetual futures open interest to Bitcoin market cap is locked at a small range between 1.5% and 1.7% over the last four weeks. The ratio is still well below the 2.6% high seen in September of last year.

Analysts at Blockware Solutions stated in a Friday newsletter that “it shows there hasn’t been a significant change in risk appetite among futures traders despite BTC being above $30,000 for the last month.”

Analysts added that “Open Interest/Market Cap ratio remains relatively low,” which means spot will likely continue to drive the price higher on the short- to medium-term as supply continues slowly to contract into the long-term holders’ hands.

The open interest ratio to the market cap is stagnant. (Glassnode and Blockware Solutions).

Some traders may not view a bitcoin ETF as a game-changer or be concerned about regulatory uncertainty affecting market values in the short term.

Perpetuals is a futures contract that has no expiry date. Open interest is the dollar amount locked into the number of active contracts.

Leverage allows the trader to open positions that are worth more than what they have deposited at the exchange as a margin. Leverage can magnify profits and losses, and expose traders to liquidations. This is the forced unwinding bullish long positions or bearish short ones due to a margin shortage. Liquidations are more likely to occur when leverage is high.

Divide the open interest by BTC in wallets linked to derivative exchange wallets. Since June 20, the so-called “estimated leverage”, popularised by South Korea’s CryptoQuant, is largely unchanged, indicating that average traders are playing it safe.

The estimated leverage ratio is still range bound. (CryptoQuant) (CryptoQuant)

Reduced volatility in price is a result of low leverage. Bitcoin’s price has been stagnant in the $29,500-$32,000 range for the last four weeks. CoinDesk’s data shows that at the time of press, Bitcoin was trading for $29,790. This represents a loss of 1% on the day.

Parikshit Miishra is the editor.