Ether has emerged as the leading cryptocurrency for traders aiming to leverage their positions, surpassing Bitcoin in popularity for those looking to amplify returns. While Bitcoin continues to attract attention in institutional circles, Ethereum’s ether (ETH) is becoming the preferred choice for traders seeking to maximize profits through leveraged trading.

As of Wednesday, Ether’s leverage ratio hit a new high of 0.57, a notable increase from 0.37 at the start of Q4 2024, according to data from CryptoQuant. The leverage ratio is calculated by dividing the open interest in both standard and perpetual futures contracts by the total amount of ETH held in wallets connected to exchanges offering futures trading.

A rising leverage ratio signals an increasing use of leverage by traders, indicating a rise in market speculation and risk-taking. Leverage allows traders to control larger positions in the market with a smaller upfront investment. For example, with a 10:1 leverage ratio, a trader can control a $10,000 position with just $1,000 in margin. While leverage can significantly boost profits, it also amplifies losses and increases the risk of liquidation, which can lead to forced closures of positions when margin levels are insufficient.

Ether’s leverage ratio exceeding 0.5 suggests that a large proportion of trading activity in the futures market is being driven by leveraged positions relative to the actual ETH held in exchange wallets. This level of leverage is notably higher than Bitcoin’s, which currently stands at 0.269. While this marks the highest Bitcoin leverage ratio since early 2023, it remains much lower than the 0.36 peak reached in October 2022.

Given the growing leverage in Ether’s market, it’s possible that Ether will experience greater price swings than Bitcoin in the near future, potentially facing double the volatility.