Bitcoin’s derivatives market has sharply deleveraged, with over $10 billion in open interest erased within two months. The reset follows a wave of liquidations triggered by political instability linked to former U.S. President Donald Trump’s recent actions, leading analysts to reassess market conditions.
On January 17, Bitcoin’s open interest reached an all-time high of over $33 billion, according to data from CryptoQuant. Analyst DarkFost used this data to highlight the extreme leverage in the market, which had never been recorded at such levels before.
However, by March 4, nearly $10 billion in open interest had vanished. The sharp decline has pushed Bitcoin’s 90-day futures open interest change to -14%, a level historically associated with market resets before price recoveries.
DarkFost described the development as a “natural reset,” arguing that such phases are essential for sustaining bullish momentum.
“More than $10 billion in open interest has been wiped out in just two months,”
He wrote on X, pointing to past instances where similar declines have preceded major rallies. His analysis, based on CryptoQuant data, highlights how excessive leverage often builds up ahead of steep corrections, and once positions are liquidated, the market stabilizes.
Despite the short-term shakeout, some analysts remain optimistic about Bitcoin’s trajectory. Timothy Peterson, an economist known for his Bitcoin models, emphasized the cryptocurrency’s seasonal trends.
“Nearly all of Bitcoin’s annual performance occurs in two months: April and October,”
He noted. Peterson believes Bitcoin could reach a new all-time high before June, aligning with previous cycles where price recoveries followed periods of heavy liquidations.
Peterson clarified that his “Lowest Price Forward” model does not predict where Bitcoin will be, but rather where it won’t be. According to his analysis, there is a 95% probability that Bitcoin will not fall below $69,000.
His model has historically provided reliable estimates for Bitcoin’s price floor, suggesting that past 30% pullbacks have often preceded strong rebounds.
Not all analysts share this optimistic outlook. Benjamin Cowen, founder of Into The Cryptoverse, warned that Bitcoin’s bull cycle could be at risk if it falls below its 2024 highs, which sit in the lower $70,000s. “If Bitcoin closes in the low $60,000s, it could indicate the end of the bull market,” Cowen said in a March 15 YouTube stream.
He compared the current market structure to 2017, when Bitcoin retested the prior year’s high before rallying again. Cowen cautioned that a failure to hold the $70,000–$73,000 range could signal a macro lower high, leading to a more bearish outlook by Q3.
At the time of writing, Bitcoin is consolidating near $83,200. Analysts are watching key price levels closely, as the market’s next move will determine whether the recent deleveraging serves as a launchpad for another rally or marks the start of a prolonged correction.
