Bitcoin Market Update

Bitcoin’s Open Interest Surge

Bitcoin’s (BTC) Open Interest (OI) climbed to $27.9 billion, indicating a $3.3 billion rise—representing a 13% increase in leveraged market activities.

Previous spikes in Open Interest have caused unpredictable price swings, seen on February 20 and March 4. This latest leverage-driven increase has prompted traders to proceed with caution in managing their risks.

At the time of writing, Bitcoin’s trading price is around $83,000. However, excessive leverage could cause market liquidations, leading long positions to decline quickly, bringing prices down to the $70,000 – $80,000 range.

Historically, when OI surpasses 10%, prices have retraced by 5-8%, similar patterns observed on February 22 and March 6. Current market dynamics present opportunities for short sellers to benefit from possible liquidations.

A sustainable rise above $90,000 could foster additional market expansion, although an OI flush might abruptly negate existing price gains. Traders must remain vigilant regarding sudden changes in OI.

Traders’ Reactions to Weak Demand

A notable decline in BTC demand from December 2024 to March 2025 was observed, with a low annual demand of -100k BTC by mid-March after reaching a peak of 105k BTC in early December.

This decline in market value and the negative demand structure highlighted significant investor caution. The unfavorable conditions were exacerbated by a 30-day accumulation maintaining positions below the demand line, as BTC’s price dropped from 105k to approximately 77k.

This situation suggests a lack of substantial investor movement information. Many investors appear to be protecting their capital by diverting funds into less risky assets such as metals, U.S. government bonds, and the stable digital currency USDT.

Market participants are shifting their investments to safer assets amid falling Bitcoin prices and demand. This scenario places BTC long position holders at notable risk as conditions hint at the emergence of a bear market.

Moreover, leveraged long position holders could face compulsory sell-offs if prices dip below the $80,000 level and demand persists in the negative at -100k. Such a scenario could result in considerable losses, especially since analysis indicates bearish trends persist when demand remains below -100k since last December. Traders banking on BTC’s rebound above $100,000 could encounter financial setbacks.