Bitcoin’s recent open interest decline of nearly $12 billion may be just what the asset needs to regain its upward trend, according to a cryptocurrency analyst.
“This can be viewed as a natural market reset, an important stage for supporting a bullish continuation,” noted a contributor.
“Historically, each past deleveraging event has offered favorable opportunities for the short to medium term,” the analyst added.
According to data, Bitcoin’s open interest (OI)—which tracks the total number of unsettled Bitcoin derivative contracts like options and futures—was at $61.42 billion on February 20, but dropped by 19% to $49.71 billion by March 4.
At the time of writing, Bitcoin’s open interest is at $49.02 billion.
This significant change occurred amidst price volatility driven by uncertainties surrounding tariffs imposed by the US administration and the future of interest rates in the country.
“Following the recent panic stemming from political unrest related to these tariff decisions, we saw a hefty liquidation of leveraged Bitcoin positions,” the analyst pointed out.
During this two-week span, Bitcoin’s price dipped below two critical thresholds, approaching levels not seen since the days following the election in November.
On February 25, Bitcoin’s price fell below $90,000, and just two days later, it dropped below $80,000 for the first time since November. Currently, Bitcoin is trading around $83,400.
Recently, a chief analyst expressed that with Bitcoin settling in the low $80,000s, both its price and open interest could experience increased volatility if any surprises arise from the Federal Open Market Committee meeting on March 19.
“The market primarily anticipates the Federal Reserve will maintain current rates, but any unanticipated hawkish hints could exert pressure on Bitcoin and other risk-related assets,” he mentioned.
Currently, markets are indicating a 99% probability that the Federal Reserve will keep interest rates stable, according to the latest projections.
At publication time, Bitcoin’s open interest reflects an approximate 6.5% increase over the past five days.
This piece is not intended as investment advice or recommendations. Every trading decision carries risk, and readers are encouraged to conduct their own research before making choices.