Bitcoin’s open interest (OI) has declined significantly, reaching its lowest levels in over a year, signaling a shift away from leveraged trading.
Key Insights:
Total open interest across all exchanges has fallen from 546,000 BTC in November to 413,000 BTC ($36 billion), the lowest since August.
A large portion of the OI decline is tied to the unwinding of CME basis trades, indicating reduced institutional activity.
Bitcoin’s recent price movements—from $109,000 to $78,000, then back to $90,000—suggest that the latest recovery has been spot-driven rather than leverage-driven.
What This Means for the Market:
Lower leverage reduces volatility: The decline in open interest suggests less speculative trading, which could lead to more stable price movements.
More organic price action: With a greater share of the market driven by spot purchases, Bitcoin’s price movements may reflect stronger underlying demand.
Market sentiment shift: A decline in OI, particularly below 2% of Bitcoin’s total market cap, indicates a period of risk reduction among traders.
The current trend suggests a more conservative approach to Bitcoin trading, with traders moving away from high-risk leveraged positions. Whether this signals a period of accumulation or a broader shift in market dynamics will depend on upcoming macroeconomic factors and institutional positioning, according to CoinDesk.
