Since the beginning of this year, a key indicator of the Bitcoin derivatives markets has experienced a sharp decline. The open interest (OI) has dropped by approximately 30% from its October 2025 peak. This decrease is accompanied by a massive reduction in leverage across the derivatives ecosystem. For many analysts, this movement could signal not only the end of an intense speculative phase but also the building of a solid foundation for a possible bullish recovery.
Key Developments in Bitcoin Derivatives
- •Open interest in Bitcoin derivatives markets has declined by approximately 30% since its October 2025 peak.
- •This decline reflects a massive purge of leveraged positions, often associated with phases of market correction and stabilization.
A Leverage Purge: Understanding Its Significance
Open interest measures the total value of contracts that have not been settled. When it increases, it can indicate that new capital is entering long or short positions. However, when it sharply declines, as it does today, it does not go unnoticed. Indeed, it often means that highly leveraged positions are being closed, either voluntarily or following forced liquidations.
In the case of Bitcoin, the OI reached a historic high of more than $15 billion in early October 2025. That is nearly three times the peak of the previous major bull phase in 2021. This peak reflected extremely high speculation, with massive commitments of capital in futures markets.
Since then, a reduction of over 30% in OI has occurred, bringing the level to a more moderate point. This contraction happened alongside a period of price correction and significant liquidations. By removing these high-risk positions, the market is purging excess leverage. This action reduces the risk of future waves of violent sell-offs.
Bitcoin's Path Towards a Potential Market Bottom
This type of reduction in open interest has often coincided with the formation of significant lows in Bitcoin cycles. According to analyst CryptoQuant’s data, these deleveraging phases have frequently marked the bottom of a market before a healthier and more sustainable recovery.
Indeed, when traders engage too much capital with leverage, the slightest price movement can trigger waves of liquidations. This can cause panic movements, greatly amplifying price declines. Thus, reducing open interest means removing these fragile positions, bringing a more stable balance between buyers and sellers.
This "purge" could translate into a market less vulnerable to sudden shocks. As leverage decreases, prices could have more room to stabilize. They could also rise without triggering additional liquidation waves.
Even though this reduction of positions is seen as a potentially bullish technical signal, it does not automatically mean that an uptrend has begun. Some market derivative data providers indicate that structural trading is not yet clearly moving towards a bullish market. The current environment seems more reactive than anticipatory. Price increases push some traders to close positions rather than open new ones.
Long-term investors could view this cleanup as a strategic repositioning opportunity. Meanwhile, more active traders will keep an eye on technical indicators. They will scrutinize the evolution of market sentiment.