Bitcoin Sheds 30% of Its Open Interest: Is a Rebound Imminent in 2026?

• What’s Happening with Bitcoin’s Open Interest?
• Why Does This Leverage Purge Matter?
• Is Bitcoin Nearing a Market Bottom?
• The Silver Lining for Long-Term Investors
• What Traders Should Watch Next
• FAQs: Bitcoin Open Interest Drop Explained

Bitcoin's derivatives market has seen a sharp 30% drop in open interest (OI) since its October 2025 peak, signaling a deleveraging phase that could pave the way for a healthier uptrend. While this purge of speculative positions often precedes market bottoms, analysts caution that a sustained bullish reversal isn’t guaranteed—yet. Here’s why traders are watching this metric like hawks.

What’s Happening with Bitcoin’s Open Interest?

Since January 2026, Bitcoin’s open interest—the total value of unsettled derivatives contracts—has plummeted by roughly 30% from its all-time high of $15 billion in October 2025. This wipeout mirrors the leverage purge during the 2021 cycle’s correction phase. Data fromandshows OI levels now hovering at more moderate levels, reminiscent of pre-bull market consolidation.

Think of open interest as the market’s adrenaline gauge. When it spikes, traders are piling into Leveraged long/short positions. But a 30% contraction? That’s the equivalent of a cold shower. The BTCC research team notes this suggests mass liquidations—both voluntary and forced—have flushed out overextended bets. Historically (see 2018 and 2021), such resets often precede calmer, more sustainable rallies.

Is Bitcoin Nearing a Market Bottom?

CryptoQuant’s analysts point out that past cycles saw similar OI drops coincide with price floors. Why? Fewer leveraged positions mean fewer dominoes to topple in a sell-off. That said, don’t break out the champagne yet. Derivatives traders remain reactive rather than anticipatory—most are closing positions on price pops instead of opening new ones. As one veteran put it: “This isn’t FOMO season; it’s PTSD season.”

The Silver Lining for Long-Term Investors

For hodlers, this reset could be a gift. Lower leverage reduces violent price swings, letting bitcoin stabilize organically. The BTCC exchange has observed steady spot buying during this dip, suggesting accumulation by strategic players. Still, with macroeconomic uncertainty lingering, the market might need more time to “digest” this deleveraging.

What Traders Should Watch Next

Key signals include:

• OI stabilization: A sideways trend could indicate selling exhaustion.
• Funding rates: Neutral or slightly negative rates often precede rebounds.
• Spot volume: Rising volume on green candles would confirm buyer conviction.

The last three times OI dropped 25%+, Bitcoin gained 120%+ within 12 months—but past performance isn’t predictive. This article does not constitute investment advice.