The Futures Open Interest Leverage Ratio is calculated by dividing the market open contract value, by the market cap of the asset (presented as %). This returns an estimate of the degree of leverage that exists relative to market size as a gauge for whether derivatives markets are a source of deleveraging risk.

• High Values indicate that futures market open interest is large relative to the market size. This increases the risk of a short/long squeeze, deleveraging event, or liquidation cascade.

• Low Values indicate that futures market open interest is small relative to the market size. This is generally coincident with a lower risk of derivative led forced buying/selling and volatility.

• Deleveraging Events such as short/long squeezes, or liquidation cascades can be identified by rapid declines in OI relative to market cap, and vertical drops in the metric.