Bitcoin Futures, Deleveraging End Signal...Will the Money That Entered After 8 Months Become a Bomb Again?

▲ Bitcoin (BTC)

An analysis suggests that Bitcoin (BTC) derivatives traders are re-entering the market after going through the longest deleveraging phase since the 2022 bear market. As Binance futures open interest once again surpassed its 180-day moving average, a trend of recovering preference for risk assets was observed.

NewsBTC reported on May 23 (local time), citing an analysis by CryptoQuant analyst Darkfost, that signals indicating the end of an approximately 8-month deleveraging phase in the Bitcoin derivatives market have appeared. Darkfost explained that after the October 10 event, the Bitcoin correction coupled with the deterioration of the global macroeconomic and geopolitical environment led traders to reduce their risk exposure across the derivatives market.

Darkfost defined the period where open interest fell below the 180-day moving average as a deleveraging phase. This indicates that futures activity decreases when market corrections trigger liquidations and position closures, leading to reduced investor exposure. This deleveraging was notable not only for its duration but also for its similarity to the trend observed before the FTX collapse in 2022.

The turning point emerged in early May. According to Darkfost, Binance's open interest increased from $6.4 billion in March to approximately $8.96 billion currently, once again surpassing its 180-day average of around $8.75 billion. He stated, “This virtually signifies the end of the deleveraging period.”

The recovery in futures positions was also analyzed to have supported Bitcoin’s rebound from its correction phase. An increase in open interest means that more traders are committing funds to directional and leveraged strategies. Darkfost assessed that the newly inflowed participation “clearly contributed to the ongoing upward correction.”

However, this trend does not confirm a stable recovery. Darkfost observed that even amidst a deteriorating macro environment, Bitcoin’s sharp correction attracted speculative traders looking for a rebound. He warned, “This trend is very fragile, and if Bitcoin resumes the correction that began in October, traders could exit as quickly as they entered.”

As of the time of writing, Bitcoin was trading at $77,479. While the re-entry into the derivatives market is a factor supporting a short-term rebound, if spot flows weaken or macro conditions worsen, the recently accumulated leverage could again turn into downward pressure.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*