Published on March 17, this insight was part of CryptoQuant’s “Quicktake” blog series. The deleveraging event comes after Bitcoin hit its current all-time high in mid-January, causing a shift towards risk-aversion among Bitcoin derivative traders.

CryptoQuant’s data, which is derived from several leading crypto exchanges, shows that aggregate open interest on futures dwindled by $10 billion in merely three weeks, between February 20 and March 4.

“On January 17th, Bitcoin’s open interest peaked at over $33B, implying that market leverage had reached unprecedented levels,” writes Darkfost, a CryptoQuant contributor. He believes the decline represents a natural market reset, a crucial step towards maintaining a bullish trend.

An included chart clearly demonstrates the 90-day rolling change in aggregate open interest, shedding light on the market’s drastic reversal after reaching all-time highs. “At present, the 90-day change in Bitcoin futures open interest has plunged sharply, now standing at -14%,” concludes Darkfost.

Meanwhile, Kriptolik, another CryptoQuant contributor, points to a growing activity in derivative markets since November 2024, with an increase in stablecoin reserves across these exchanges. However, he warns that this does not necessarily translate to a price increase.

“Despite the rapid growth in total stablecoin supply since November 2024, it hasn’t significantly benefited the market or investors,” another blog post explains. Kriptolik highlights a “demand crisis” in spot markets and advises against high-leverage, high-risk trades until the distribution normalizes.

Please note: This article does not provide investment advice or recommendations. Every investment and trading decision involves risk. Readers should conduct their own research before making a decision.

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