Bitcoin (BTC) Faces Major Deleveraging as Market Resets

The cryptocurrency market has undergone one of its most severe deleveraging events, according to Glassnode. Over $19 billion in open interest was eradicated, and futures funding rates collapsed to levels reminiscent of the 2022 bear market. This rapid unwinding of leverage led to widespread liquidations and a sharp adjustment in market positioning.

Market Overview

Momentum indicators, such as the Relative Strength Index (RSI) and spot Cumulative Volume Delta (CVD), indicate a significant shift as buying pressure diminished, and aggressive selling took over short-term transactions. The contraction in futures open interest reflects a broad reduction in risk across the derivatives markets. Meanwhile, realized profit-loss metrics suggest a period of loss realization and cooling market sentiment.

Despite the intensity of the deleveraging, the broader market structure remains intact. Spot trading volumes are still high, ETF inflows continue unabated, and entity-adjusted transfer volumes indicate strong on-chain activity. These dynamics imply that while leveraged traders were forced out, structural capital and institutional demand persist beneath the surface.

Options and On-Chain Metrics

In the options market, open interest saw an uptick as traders adjusted around new volatility regimes. A modest rise in skew suggests a renewed demand for downside protection. On-chain metrics reflect this normalization, with profitability ratios easing from euphoric levels but still indicating a market largely held by profitable participants.

The deleveraging marks a significant yet necessary reset for the Bitcoin market. Excess leverage has been purged, speculative positions have been reduced, and short-term sentiment has been recalibrated. As liquidity and broader market participation remain stable, the market now enters a consolidation phase characterized by renewed caution, selective risk-taking, and a more measured rebuilding of confidence across both spot and derivatives markets.

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