Bitcoin Open Interest Crashes to Lowest Since 2022, Signaling Reset

The Bitcoin BTC $90 712 24h volatility: 0.3% Market cap: $1.81 T Vol. 24h: $42.92 B  open interest just fell to late 2022 levels, when the FTX collapse brought the crypto market down, and the leading asset fell to $15,000.

According to a CryptoQuant analysis, leading crypto exchanges saw notable declines in their futures contracts for the first time in just over three years.

Binance leads the list with a decline of 1.53 million BTC in its 30-day open interest change indicator, followed by Bybit’s 784,000 BTC, Gate’s 505,000 BTC, and OKX’s 395,000 BTC drops.

This means far fewer traders are holding active futures contracts. CoinGlass data shows that the total BTC open interest is currently sitting at $62 billion. On Oct. 7, it reached an all-time high of just over $94 billion.

The drop in open interest is not new leverage building but is deleveraging as traders have been closing risky positions.

However, this might not be a strong bearish signal. The CryptoQuant analyst explains that when leverage gets flushed out like this, the market often pauses or reverses later.

Bitcoin is currently trading at $90,900, showing a sideways movement over the past 24 hours.

A Much-Needed Reset

January started with a market-wide surge for the crypto market, with Bitcoin breaking above $94,000, but a deeper reset started to surface.

On Jan. 6, the BTC price rose to a local high of $94,700. Technical indicators, the monthly moving average convergence/divergence (MACD) on OTHERS/BTC, for instance, turned bullish.

According to a Santiment analysis, major headlines around exchange-traded funds acted as a bullish catalyst for Bitcoin’s upward momentum in the first week of January.

The banking giant Morgan Stanley also filed for an Ethereum ETH $3 109 24h volatility: 0.5% Market cap: $375.26 B Vol. 24h: $20.64 B ETF. This also triggered a short-term spike in ETH and altcoin prices. However, the bullish momentum saw a blockage soon. Bitcoin’s fall below $90,000 triggered a market-wide selloff, bringing in over $450 million in daily liquidations.

Spot BTC ETFs in the US recorded a net outflow of $1.12 billion over the past three days, according to data from SoSoValue.

On the other hand, the Santiment analyst suggests that the market participants are “de-risking” due to the upcoming US economic data, including the jobs report and the shifting rate-cut expectations.

Overall, the most likely near-term scenario is further consolidation or a mild rebound, but not an immediate breakout.

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