Bitcoin (BTC) trading platforms are undergoing a significant “deleveraging event,” which is expected to influence forthcoming growth, according to recent analysis.
In a recent “Quicktake” blog article dated March 17, the on-chain analytics service CryptoQuant disclosed a $10 billion capitulation in Bitcoin futures markets.
Bitcoin encounters “crucial” event for BTC price recovery
Traders in Bitcoin derivatives have swiftly adopted a cautious stance since BTC/USD reached its current peak in mid-January.
CryptoQuant, relying on information from several leading cryptocurrency exchanges, estimates that total open interest (OI) in futures plummeted by $10 billion in merely three weeks from February 20 to March 4.
“On January 17, the open interest for Bitcoin hit a peak of over $33B, demonstrating that leverage within the market had reached unprecedented levels,” contributor Darkfost notes.
The decline, he posits, “can be considered a natural market reset, a crucial step for maintaining a bullish trend.”
Bitcoin futures OI data from leading exchanges. Source: CryptoQuant
An accompanying chart illustrates the 90-day rolling variation in aggregate OI, emphasizing the intensity of the market’s reversal following the peak values.
“At present, the 90-day change in Bitcoin futures open interest has declined sharply, currently at -14%,” Darkfost concludes.
“Based on past trends, previous deleveraging events of this nature have presented solid opportunities for the short to medium term.”
Crypto “demand crisis” arises
Continuing, fellow CryptoQuant contributor Kriptolik observed an increasing level of activity in derivatives markets overall since November 2024.
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He revealed that stablecoin reserves across derivatives exchanges are on the rise, even exceeding those of spot markets. Nonetheless, this is not necessarily a formula for price appreciation.
“When we examine the volume and circulation of stablecoins, which serve as fuel in the market, we observe that even with a rapid uptick in total stablecoin supply since November 2024, this has not correspondingly benefited the market or investors in any substantial manner,” another blog article illustrates.
Kriptolik describes spot markets as experiencing a “demand crisis.”
“Until this distribution stabilizes, steering clear of high-leverage (high-risk) trades might be the most sensible strategy,” he added.
Stablecoin reserves on exchanges (screenshot). Source: CryptoQuant
This article does not constitute investment advice or recommendations. Every investment and trading action entails risk, and readers should perform their own analysis when making decisions.