Cryptocurrency analytics firm Alphractal has shared a new assessment aimed at understanding the effects of leveraged trading on the market. Drawing attention to how Open Position and long/short ratio data move together, the company presented four basic scenarios regarding investor sentiment and possible risks. Scenario 1: Both Open Position and Long/Short Ratio Increase This scenario suggests that there is both more open interest in the market and that investors are heavily bullish. According to Alphractal, this could indicate excessive optimism. Example coins: ETH, TRX, UNI, DOT, CHZ, WIF, VET, SAND, LAND, EGLD, INJ, SUN, FET, LTC, TRUMP Details for this scenario: Investors are heavily positioned that prices will increase. Excessive optimism increases the risk of correction. If prices fall, there is a risk of mass liquidation of long positions (“long squeeze”), which could accelerate the decline. Although an overall uptrend is evident, excessive optimism could signal a reversal. Scenario 2: Open Position Falls, Long/Short Ratio Falls This structure reflects decreasing leverage and increasing caution in the market. Example coins: BNX, KAITO, ZEC, IP, EOS, BB, ALPACA, STO, BABY Details for this scenario: Investors are closing their positions and avoiding risk. In general, the expectation of a decline prevails. A reversal in the upward direction may occur after extreme fear. Low leverage can limit sudden moves. It may gain stability as selling pressure eases. Scenario 3: Open Position Increases, Long/Short Ratio Falls As new capital enters the market, investors are predominantly taking bearish positions. Example coins: XMR, AAVE, MASK, ORCA, CVC Details for this scenario: A high rate of short positions are opened. Downward expectations are prominent. If prices rise contrary to expectations, a “short squeeze” may occur. This can cause sudden and strong increases. If buying pressure comes, the upside potential is high. Scenario 4: Open Position Falls, Long/Short Ratio Increases As capital exits the market, remaining investors take bullish positions. Example coins: SOL, BNB, XRP, ADA, RUNE, AXS, APT, PEPE, SUI, NEAR, ONDO, TIA, BONK Details for this scenario: While the number of investors decreases, long positions increase. This may reflect a lack of confidence in the uptrend. If buying power is weak, long positions may be liquidated. The sustainability of the upward momentum is questionable. If the support levels are broken, the risk of a decline increases. *This is not investment advice.