The cryptocurrency market is experiencing notable shifts as open interest in Bitcoin derivatives has plummeted by 31% since October 2023. This trend, highlighted by CryptoQuant, suggests a significant deleveraging phase that could reshape market dynamics. The publication provides the following information:
Market Bottoms Indicated by Decline in Open Interest
According to crypto analyst Darkfost, the recent decline in open interest is often indicative of market bottoms, historically paving the way for potential bullish recoveries. This pattern suggests that traders may be reducing their leveraged positions in response to market volatility.
Potential Risks of Further Decline
However, Darkfost also warns that if Bitcoin's price continues to decline, the open interest could decrease even further. Such a scenario would signal deeper deleveraging and could extend the current market correction, raising concerns among investors about the sustainability of any forthcoming recovery.
The recent shift in market sentiment is highlighted by the Crypto Fear and Greed Index, which now shows a greed score of 61, marking a significant change from the fear observed in the cryptocurrency market. For more details, see more.
