Bitcoin Open Interest Sees Sharpest 30-Day Drop of Current Cycle

In Brief

• Open interest plunges 1.3M BTC, marking the cycle’s steepest 30-day drop.
• Leverage unwinds as liquidations rise; cleanup may support long-term stability.
• ETF outflows show cautious sentiment while the market braces for a potential rebound.

Bitcoin open interest has recorded its largest 30-day decline of the current cycle, signalling a significant market shift. The drop, led mainly by Binance, amounts to around 1.3 million BTC in reduced open interest.

This sharp decrease follows weeks of price correction and continued trader liquidations across key exchanges. Many investors are reducing their exposure or closing positions, which further accelerates the decline in open interest.

As the correction deepens, speculative activity unwinds and leverage-driven trades collapse under market pressure. Such cleanups are historically necessary to stabilise prices and reset bullish momentum.

The current cycle has shown extremely high leverage levels, with open interest peaking at $47.5 billion recently. This intense speculative behaviour created an unstable environment, now facing a sharp contraction.

Although painful for many participants, this phase helps restore balance by eliminating excess risk and unrealistic optimism. Market corrections of this nature often precede stronger, more sustainable recoveries when sentiment resets.

Short-Term Capitulation Grows While ETF Trends Diverge

Short-term Bitcoin holders have started surrendering as sentiment flips from positive to negative during this correction phase. This behaviour is similar to prior capitulation phases seen earlier in the bull cycle.

However, broader SOPR indicators provide two conflicting outcomes depending on the long-term market direction. If this is a correction, the current zone may form a bottom, but if a bear cycle is beginning, deeper declines could follow.

Despite the uncertainty, a short-term rebound remains likely unless the market fails to hold the $80,000 support level. A break below this area could signal further downside and prolonged weakness ahead.

Meanwhile, ETF flows reflect cautious investor sentiment as Bitcoin and Ethereum spot ETFs posted outflows for another consecutive week. Bitcoin saw $1.22 billion in outflows, Ethereum lost $500 million, while Solana gained $128 million in new inflows.

This divergence highlights shifting investor preferences amid broader efforts to reduce risk. The market continues to adjust to a new phase marked by lower leverage and tighter liquidity.