Bitcoin Deleveraging: Bullish Sign?
Bitcoin’s (BTC) 90-day open interest, which is the total dollar value of futures and contracts that are still open, is currently declining. This decrease in open interest is happening as fear in the market is rising, suggesting that Bitcoin (BTC) markets are entering a “deleveraging” phase. Historically, these deleveraging periods have often presented great opportunities for traders.
Bitcoin’s (BTC) open interest drops; opportunity for bulls?
According to @Darkfost_Coc, a CryptoQuant community expert, the 90-day open interest for Bitcoin (BTC), the leading cryptocurrency, is exhibiting a negative trend. This indicates that fewer traders are holding open positions with leverage.
Over the past few days, Bitcoin’s 90-day open interest has fallen sharply, dropping from $33.6 billion to $23.1 billion – a significant 31.2% decrease from its highest point. This noticeable decrease strongly suggests that Bitcoin futures traders, in particular, are becoming more hesitant.
CryptoQuant experts highlight that these “cool-down” periods often create opportunities for traders. Historically, deleveraging phases have consistently presented favorable short- to medium-term trading opportunities in the Bitcoin market.
Recent examples of significant deleveraging events include the periods leading up to the spot Bitcoin ETF approvals in the U.S. in January 2024 and during the recession spanning from Q4 2022 to Q1 2023.
Currently, Bitcoin open interest on major exchanges is still in rapid decline.
Crypto market fear increases again
Bitcoin (BTC), the leading cryptocurrency, is currently trading around $83,300, showing a slight increase of 0.28% over the last 24 hours. In that same period, the daily trading volume for BTC/USDT pairs has nearly doubled on major crypto exchanges.
Despite this, overall sentiment in the cryptocurrency market remains pessimistic. The Crypto Fear and Greed Index currently sits at 32 out of 100, still within the “fear” territory.
Market nervousness is possibly rising as we approach the FOMC meeting in the U.S. on March 18-19, due to anticipation of potential new monetary policy announcements.
