• Bitcoin Combined Books at 1-5% spot order-book depth showed shallow order-books.
• Retail investors began to take excessive risks in derivative market on slight recovery.

AMBCrypto’s analysis of Bitcoin [BTC] by the Combined Books revealed crucial insights into the order-book depth at the 1-5% range.

Notably, each price spike corresponded with moments when order-book depth dipped below 135 million. Historically, it signaled a potential bottom.

The instances were evident around the 13th and 21st of January, where Bitcoin’s price found strong support levels, suggesting a limited sell-side pressure and a possible setup for a bullish reversal.

Observing these highlighted periods, traders could gauge shifts in market sentiment and liquidity constraints, often preempting uptrends.

For instance, after the depth dropped significantly on the 19th of January, a subsequent rise in price followed, supporting the theory that shallow order books might indicate the exhaustion of sell pressure.

If the order book depth remains consistently low, it could hint at a sustained bullish trend, whereas a sudden increase might suggest incoming volatility or price corrections.

Why it could be still okay to take BTC risk?

Further analysis showed the aforementioned slight move saw Bitcoin’s Estimated Leverage Ratio (ELR) soar, reflecting confidence and willingness from retail investors to assume greater risks.

This led to the question — was the Bitcoin correction over, or the market was just trapping leveraged long traders?

The uptrend in leverage could also precipitate steep declines, as seen in 2022 when the ELR decreased, signaling a reduction in risk-taking during the downturn.

This indicated the role of leverage in amplifying market movements—both upswings and downturns.

Despite these cycles engaging in leveraged positions from retail investors, it remains compelling, as the investors can capitalize on market upturns, suggesting a

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Author: Lennox Gitonga