Bitcoin open interest shows a significant decline in line with the price contraction over the past month, a development that analysts say could be an early indicator that the market is forming a bottom before starting a new upward trend.
Data from CryptoQuant shows Bitcoin open interest recording the sharpest drop in 30 days, around 1.3 million BTC, with the current value estimated to reach $114 billion as Bitcoin is traded around $87,500.
Analysts describe this situation as a significant ‘market cleansing’ phase.
The decline in Bitcoin prices over the past few weeks has also triggered a wave of position liquidations, forcing traders to adjust their strategies or reduce their risk exposure in the futures market.
This situation indicates that investors are now more cautious and tend to halt excessive speculative activity.
According to Darkfost, the last time Bitcoin open interest declined at a similar rate was during the 2022 ‘bearish’ market, highlighting the importance of the current correction phase in rebalancing the market structure.
Overall, Bitcoin has dropped about 20% over the past month and fallen more than 30% from the peak above $126,000 recorded nearly two months ago in early October.
Meanwhile, crypto analyst and MN Fund founder, Michaël Van de Poppe, believes the coming weeks will be a key determinant of Bitcoin’s direction. According to him, if BTC can surge and maintain a position within the $90,000 to $96,000 range, the potential to record a new all-time high will increase significantly.
He also emphasized that the high levels of ‘fear’ and panic currently in the market usually occur near the bottom zone, thereby opening up opportunities for price recovery if technical support is successfully maintained.
