Bitcoin’s (BTC) Open Interest Drops; Opportunity for Bulls?

Bitcoin’s (BTC) 90-day open interest, which reflects the aggregated USD-denominated value of unsettled futures and contracts, is losing volume. Amid increasing fear sentiment, BTC markets are in a “deleveraging” phase, historically presenting lucrative opportunities for traders.

Analyzing the 90-Day Open Interest

According to CryptoQuant expert @Darkfost_Coc, the dynamics of Bitcoin’s 90-day open interest have turned negative, indicating that fewer traders are holding leveraged positions.

> “This chart highlights such reset phases by identifying moments when the 90-day open interest change turns negative. Historically, each past deleveraging like this has provided good short-to medium-term opportunities.” – @Darkfost_Coc

As of recent data, Bitcoin’s 90-day open interest has declined from $33.6 billion to $23.1 billion, marking a 31.2% decrease from its peak. This downturn suggests that Bitcoin traders, especially those involved in futures, are becoming increasingly cautious.

Experts from CryptoQuant note that such “cool-down” phases often unlock opportunities for traders, with past deleveraging events typically leading to advantageous trading conditions.

Recent massive deleveraging events occurred before the U.S. spot Bitcoin ETF approvals in January 2024 and during the recession from Q4 2022 to Q1 2023.

At the time of this report, Bitcoin open interest on major exchanges is still declining.

Crypto Market Fear Accelerates

Currently, Bitcoin is trading at $83,300, showing a slight increase of 0.28% in the last 24 hours. Notably, the daily trading volume for BTC/USDT pairs almost doubled on major centralized exchanges (CEXes).

Despite this, overall pessimism continues to plague cryptocurrency markets, with the Crypto Fear and Greed Index dropping to 32/100—indicating a state of “fear.”

Market anxiety might be increasing ahead of the upcoming FOMC meeting in the U.S. on March 18-19, during which new monetary policies could be announced.