Ethereum Leverage on Binance Hits Record High as Fusaka Upgrade Looms

ETH traders are piling on leverage at unprecedented levels—just as the network gears up for its biggest upgrade in years.

The leverage frenzy

Binance's ETH perpetual swaps now show the highest open interest ratios since launch. Traders appear to be betting big on volatility around Fusaka's activation window.

Upgrade jitters

The Fusaka hard fork promises lower fees and faster finality. But as any crypto vet knows—network upgrades rarely go according to script. Remember the last time 'guaranteed' EIPs got delayed?

Wall Street playbook

Classic case of 'buy the rumor, sell the news'—except this time with 50x leverage and half the risk management. What could possibly go wrong?

Binance’s ratio surged to a record of 0.57, indicating traders were operating with an unprecedented level of risk. While the notional value of positions decreased and liquidity flowed away since October 11, the risk ratio only climbed. Traders were probably attempting to recover their losses faster, anticipating the recovery of ETH. 

The ratio climbed faster in the past week, in anticipation of the Fusaka upgrade. The hard fork, which is not expected to disrupt the work of ethereum or L2 chains, is still expected to cause a more significant directional trade. 

ETH market becomes potentially riskier

ETH derivative markets trade with an open interest of $17B, recovering from a recent low of $15B. The growing open interest, combined with increased leverage, may make ETH exposed to sudden and volatile price action. Even a small price shift or a whale selling or buying can cause cascading liquidations on Binance. 

At this point, ETH is poised in the middle between a potential sweep of long positions and a short squeeze to a higher level. 

Based on the liquidation heatmap, a short squeeze can take ETH up to $3,200. Long positions can also be attacked, going back to $2,900.

ETH recovered to $3,089.42, still trading with a fragile setup. The Ethereum fear and greed index recovered to 54 points, signaling neutral sentiment following weeks of more fearful trading. 

Under the current liquidity conditions, ETH may grow above $3,150 in the short term. However, peaks in the leverage ratio are often followed by sharp corrections or shakeouts of liquidity. The ratio itself does not guarantee a price move, but signals a potential pivot from traders. 

ETH may also discount the actual news of the Fusaka update, leading to dumping and liquidations, or the unwinding of Leveraged positions. For traders, the mix of relatively low open interest and high leverage is a form of protection, even if ETH chooses to move downward again. 

Can ETH pivot in December? 

ETH locked in losses of 22.2% in November, and over 25% losses for the fourth quarter to date. 

One of the major sources of demand, treasury companies, also limited their buying. BitMine was among the only active spot buyers, while some whales slowed down their activity. 

ETH sellers emerged among older whales and ICO participants. At the same time, treasury companies only added 370,000 ETH, as Cryptopolitan reported. 

In December, ETH has been known for mixed performance. In 2024, the token lost over 10% for the last month of the year. Based on options data, ETH expects the expiry of $3.68B in contracts on December 26, with a maximum pain at $3,200.

The options market may boost ETH volatility even more in the second half of December, based on the larger event of monthly, quarterly, and annual expiry.

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