Bitcoin Leverage Cooldown Signals Market Reset: OI Drops 21% As Excess Risk Is Flushed Out

Overview

Bitcoin is currently consolidating below the $105,000 mark, maintaining stability above the crucial $100,000 support level amidst market uncertainty. Despite signs of losing momentum among bulls and exhaustion among sellers, the market is undergoing a notable deleveraging phase, resulting in a significant drop in open interest.

Current Market Situation

Bitcoin’s price is holding steady above the $100,000 mark, demonstrating resilience despite ongoing market fluctuations. Analysts note that the market has entered a deleveraging phase, which is characterized by a reduction in excessive leverage. This phase follows a major liquidation event that has led to a structural reset within the market.

Recent data indicates that open interest, which represents the total value of active futures contracts, has decreased by 21% over the past 90 days. This decline is among the steepest recorded in the current market cycle, reflecting a trend of traders reducing their risk exposure and liquidations clearing out overleveraged positions.

Analyst Darkfost emphasizes that the current cooling of leverage usage aligns with previous cleansing phases observed in past years. Historically, such periods of forced unwinding have been precursors to new market strength, as they allow liquidity to stabilize and speculative excess to dissipate.

Deleveraging and Historical Context

The current deleveraging phase shows notable similarities to previous corrective periods that led to significant recoveries in the market. In past cycles, such as those in September 2024 and April 2025, open interest declines of approximately 24% and 29% occurred, respectively. These reductions were substantial enough to eliminate excessive speculation and restore market balance.

The present 21% decline in open interest suggests that Bitcoin is nearing similar historical levels of leverage reduction. Darkfost asserts that these phases should not be viewed as bearish; rather, they represent healthy resets during bullish market cycles. By pushing overleveraged traders out of the market, these phases facilitate a stronger and more stable foundation for future growth.

Price Action and Market Indicators

Bitcoin’s price chart indicates that BTC is in a tight consolidation range between $100,000 and $105,000, where it is testing critical structural support. The price has consistently defended the 100-day moving average, suggesting that buyers are actively participating around this psychological level.

Despite the bullish trend indicated by the upward-moving 200-week moving average, momentum indicators highlight a degree of weakness. Bitcoin is facing challenges in reclaiming the $110,000 resistance level, which has previously capped rebound attempts.

Trading volume has also decreased since the October liquidation event, reinforcing the observation that the market is currently in a deleveraging phase. This reduction in volume may suggest investor hesitation but could also indicate that forced selling is nearing its end.

Impact on the crypto market

• Reduction in Open Interest: A 21% drop in open interest signals a significant reduction in overleveraged positions.
• Potential for Recovery: Historical precedents suggest that deleveraging phases can lead to new market strength and trend reversals.
• Investor Sentiment: Lower trading volumes reflect investor caution but may also indicate that the market is stabilizing.
• Support Levels: Holding above the $100,000 mark is critical for establishing a foundation for potential upward movement.
• Long-term Interest: The reduction in leverage may attract long-term investors and institutions looking for lower-risk entry points.

Updated: 11/13/2025, 7:20:17 PM