Retail traders’ behavior in moments of stress may hold the key to building a forward-looking volatility index that regulators and institutions could use to monitor systemic risk, according to Anton Palovaara, founder of Leverage.Trading.
Leverage.Trading is an educational and analytics website centered around crypto leverage, margin trading, and crypto futures
Speaking with Benzinga after the release of his firm’s Global Leverage & Risk Report, which analyzed data from 27,416 traders across 94 countries, Palovaara said the dataset surfaces patterns of defensive behavior before volatility strikes.
“Our data shows traders brace for impact long before liquidations dominate the headlines,” Palovaara said. “This behavioral lens finally gives analysts a chance to see risk sentiment before the event happens, not after the crash.”
Unlike liquidation tallies, which are reported post-event, Leverage.Trading’s tools record liquidation checks, margin stress tests, and position recalculations hours or even days before market shocks.
That pattern, Palovaara argues, reveals inefficiencies hidden beneath the surface.
“On the surface, the market looked normal,” he recalled of July 10, when activity spiked ahead of a $1.29 billion Bitcoin (CRYPTO: BTC) short wipeout the following day.
“But by July 11, our risk calculators were being hit five times more than usual. Traders were running liquidation checks and recalculating margins hours before Bitcoin’s short wipeout. That is not random noise. It is a clear signal that psychology was taking …