Bitcoin futures open interest has plummeted by $10 billion over a two-week period, marking a significant deleveraging event in the cryptocurrency market. Research from CryptoQuant indicates that this decline, which followed Bitcoin reaching an all-time high in mid-January, is crucial for resetting market dynamics and potentially paving the way for future bullish trends. The open interest on Bitcoin futures reached a peak of over $33 billion on January 17, indicating unprecedented leverage before this sharp downturn. Currently, the 90-day change in open interest stands at -14%. Insights suggest that past deleveraging events have often created advantageous opportunities for traders in the short to medium term. Additionally, there is a growing concern regarding a ‘demand crisis’ in spot markets, with stablecoin reserves on derivatives exchanges increasing but not translating to significant price benefits for traders. Analysts recommend exercising caution and avoiding high-leverage trades until market conditions stabilize.

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