According to CryptoQuant, open interest in Bitcoin derivatives markets has declined over the past three months, resulting in a reduction in leverage, which has become bullish for the overall market structure.
The 31% decline in open interest (OI) on Bitcoin derivatives since October is a “deleveraging signal” that helps eliminate excess leverage built up in the market. Said On-chain analytics provider on Wednesday.
“Historically, they have often marked significant lows, effectively resetting the market and laying a strong foundation for a potentially rapid recovery,” said crypto analyst “Darkfoist,” who was quoted in the post.
The analyst said this could be the case again, but cautioned that if Bitcoin (BTC) continues to decline and enter a full-blown bear market, “there could be a further contraction in open interest, indicating deeper deleveraging and a possible extension of the correction.”
OI refers to the number or value of crypto derivatives contracts that have not yet been settled and that remain “open”. Deleveraging is the liquidating of risky positions, thereby reducing the risk of mass liquidations that could lead to a sharp decline in prices, as was seen in the October 10 crash.
Bitcoin’s open interest to triple in 2025
The analyst said last year’s crypto derivatives “speculative frenzy” resulted in a surge in Bitcoin’s open interest, which reached an all-time high of more than $15 billion on October 6.
During the last bull market peak in November 2021, BTC open interest on Binance reached a peak of $5.7 billion, meaning OI nearly tripled in 2025.
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During a price rally accompanied by a decline in open interest, this often means that leveraged short positions are being liquidated or closed.
Traders who bet on Bitcoin are exiting their positions at losses, which has reduced selling pressure from the market. This “short squeeze” scenario could be bullish as it suggests the price rise is driven by spot buying rather than excessive leverage, making the rally more sustainable.
That appears to be the case at the moment, as spot BTC prices are up nearly 10% since the beginning of the year.
Derivatives are not in a bull market right now
Total Bitcoin OI across all exchanges and all derivatives markets is currently approximately $65 billion. According To coinglass. That’s down about 28% from a peak of more than $90 billion in early October, according to CryptoQuant’s percentage decline data.
On Deribit Bitcoin options markets, OI is highest At a strike price of $100,000, which has an estimated value of $2.2 billion, it shows that traders are bullish as there are more long (call) bets than shorts (puts).
However, the derivatives market “has not yet entered a structurally bullish phase,” informed Crypto derivatives provider Grex goes live on Wednesday.
“The current trading structure appears to be a reactive response to a sudden surge, with the long-term outlook still not leading to a bull market,” he said.
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