Bitcoin futures deleveraging hits $10 billion

Bitcoin (CRYPTO:BTC) futures markets have experienced a significant deleveraging event, with aggregate open interest dropping by $10 billion in just three weeks from February 20 to March 4.

This decline represents a 14% reduction in the 90-day change metric, marking what analysts describe as a "natural market reset" necessary for sustaining future price gains.

According to CryptoQuant, Bitcoin's open interest reached an all-time high of over $33 billion on January 17, indicating record-high leverage in the market.

This peak coincided with Bitcoin's price hitting its current all-time high, suggesting that the market had become heavily leveraged.

The drop in open interest is seen as a risk-off stance by derivatives traders since Bitcoin reached its all-time highs in mid-January.

Despite this decline, Bitcoin futures trading volume has rebounded by 32% since late February, now standing at $57 billion.

Historically, similar deleveraging events have provided good opportunities for short to medium-term gains.

However, current volumes remain below December's peak of $74 billion, indicating that the market has not fully recovered.

Binance leads in futures trading with over $18 billion of the total volume, followed by other major exchanges like Bitget, OKX, and Bybit.

The increasing stablecoin reserves across derivatives exchanges, surpassing those in spot markets, highlight the speculative nature of current price movements.

"Looking at historical trends, each past deleveraging like this has provided good opportunities for the short to medium term," CryptoQuant contributor Darkfost noted.  

At the time of reporting, the Bitcoin (BTC) price was $86,329.11.