deleveraging

The cryptocurrency market experienced a new round of selling and liquidation on Thursday, with Bitcoin briefly dropping to $61,300 before rebounding to $64,680, currently reporting around $62,500. Over the past two days, the total market leverage liquidation scale was about $3 billion. Data shows that in the past 24 hours, futures trading volume rose to $305 billion, but open interest fell by 8.5% to $111.4 billion, indicating that the market is primarily deleveraging rather than adding new positions.Bitcoin's open interest fell from yesterday's historical high of over 800,000 BTC to 766,000 BTC. Investors seem to be leaving the cryptocurrency market and turning towards AI narratives in traditional markets. The derivatives market has clearly shifted to a bearish stance. The skew of BTC and ETH put options has strengthened, showing that investors are willing to pay higher premiums for downside protection. The nominal open interest of BTC put options with a strike price of $60,000 on Deribit exceeds $1 billion, while the most actively traded options contracts in the past 24 hours were the $55,000 put options.Altcoins have seen deeper declines, with NEAR, ZEC, JUP, DASH, ENA, and FET all dropping over 10%, and HYPE falling 12% after reaching a new high this week. The subsequent performance of altcoins largely depends on whether Bitcoin can hold above $60,000; if it falls below this level, it may trigger more liquidations and put greater pressure on trading pairs with weaker liquidity.

According to analyst Darkfost (@Darkfost_Coc) in a social media post, since the event on October 10 last year, Bitcoin has undergone a long de-leveraging phase in the derivatives market. When open interest falls below the 180-day moving average, it usually indicates a decline in futures activity, and investors' risk-off behavior leads to a reduction in open interest. Affected by the deterioration of the global macroeconomic and geopolitical backdrop, traders generally choose to reduce their risk exposure.This de-leveraging phase on Binance has lasted for about 8 months, with the last similar occurrence dating back to the previous bear market in 2022, just before the FTX collapse. However, since early May, the trend seems to be changing. Open interest on Binance has risen from $6.4 billion in March to about $8.96 billion currently, re-establishing itself above the current 180-day moving average of approximately $8.75 billion. This effectively marks the end of the de-leveraging cycle.The return of investors to the derivatives market has clearly driven the current upward rebound, but it is still too early to call it a true recovery. Despite the continued deterioration of the macro environment, Bitcoin's significant pullback has attracted more speculative traders seeking rebound opportunities. It should be noted that this trend remains highly fragile; once Bitcoin resumes the adjustment trend that began last October, these traders may exit as quickly as they entered.

CryptoQuant analyst Darkfost tweeted that since October 10 of last year, the Bitcoin derivatives market has undergone an 8-month deleveraging process, with Binance futures positions once falling below the 180-day moving average.However, this trend began to change in early May. Binance Open Interest rebounded from $6.4 billion in March to approximately $8.96 billion currently, re-establishing itself above the 180-day moving average (around $8.75 billion), marking the basic end of the deleveraging phase.Darkfost pointed out that traders re-entering the market have provided support for the current rebound, but the macro environment remains severe, and the trend is still relatively weak.

Crypto market analyst Axel posted on social media that the BTC futures market saw a daily liquidation of approximately $526 million in shorts, and the open interest (OI) did not rebuild leverage after reaching a peak of 319,499 BTC, instead falling back to 293,045 BTC.The liquidation dominance indicator has turned positive after being in negative territory for two consecutive weeks, indicating the end of the systemic short squeeze phase. The current price remains stable in the range of 75,000-76,000 while OI contracts, forming a constructive structure of "cooling after a short squeeze," rather than a new round of overheating. The next focus will be whether OI will return above 300,000 BTC when the price attempts to break through.

According to independent analyst Markus Thielen, Bitcoin futures open interest has significantly reduced from a peak of $42 billion in 2025 to the current $21 billion, indicating a deep deleveraging in the market.Currently, on-site leverage is notably low, and small inflows of capital can have an amplified effect on prices; the funding rate has recently fluctuated sharply between -12.6% and +7.1%, with rapid switching between long and short positions. In terms of liquidation, the last concentrated forced liquidation occurred on February 6, and the previous leverage has basically been cleared, resulting in a relatively healthy position structure.In the short term, Bitcoin has not yet formed a clear directional trend, but the market is in a highly sensitive state, and any inflow of capital or narrative shift could trigger unexpected price volatility.

According to the Bitfinex analysis report, Bitcoin has shown unexpected resilience recently. The current derivatives market is entering a "deleveraging wave," with speculative bubbles almost completely dissipated. The Leverage Reset Index (LRI) has fallen to a multi-year low of 0.32, indicating that price discovery is dominated by spot demand rather than derivatives leverage.Additionally, retail investors holding less than 10 BTC have continued to net sell over the past 30 days, while whales holding more than 1,000 BTC have increased their holdings by about 8% since the peak in October last year. The implied volatility of at-the-money Bitcoin options is around 47%, down from 100% during the 2022 bear market. Short-term options are slightly more expensive than long-term options, indicating that the market is pricing in recent uncertainties, but the long-term outlook remains relatively constructive.Overall, the Bitcoin market is transitioning from a leverage-driven correction to a high-confidence mean reversion phase dominated by macro liquidity, with prices potentially forming a stable rebound supported by spot demand and institutional accumulation.

According to analyst Darkfost's monitoring, since February, the estimated leverage ratio for Bitcoin on Binance has significantly dropped from 0.198 to 0.152, with a rapid and substantial decline. This trend typically occurs after strong volatility and major price movements.During this period, the price of Bitcoin fell from around $96,000 to $69,000. Such fluctuations often create panic among investors, prompting some to actively close their leveraged positions, while others are forced to exit due to liquidation. This has led to a significant reduction in open contracts, reflecting the overall deleveraging process in the derivatives market.Analysts state that if the estimated leverage ratio for Bitcoin does not rebound during the consolidation period, it may indicate that the spot market is taking over the price trend, thereby helping to stabilize the market. In many cases, these deleveraging phases can allow the market to reset on a healthier foundation. Lower leverage typically means reduced systemic pressure, which helps stabilize price action before entering a new directional trend.Note: The estimated leverage ratio for Bitcoin is used to measure the intensity of leverage used by investors, calculated by comparing the open contracts in futures with the BTC reserves held by the exchange.

The asset management giant BlackRock has begun to limit withdrawals from a private credit fund with a size of approximately $26 billion due to an increase in redemption requests, raising concerns about the spillover of pressure in the global private credit market.Analysts warn that tensions in this sector could transmit to the crypto market through two channels: macro deleveraging and tokenized credit products. If private credit funds are forced to deleverage or liquidate assets, it could trigger a chain reaction among broader risk assets, affecting crypto assets including Bitcoin.

Presto Research Associate Researcher Min Jung stated that Bitcoin's drop below $63,000 seems to reflect a broad deterioration in cryptocurrency market sentiment rather than a single fundamental catalyst. In the short term, macro headlines, particularly those surrounding tariffs and resurfacing geopolitical uncertainties, are exacerbating the risk-off sentiment towards digital assets.Jung added, "It is noteworthy that even as traditional risk assets remain relatively resilient, cryptocurrencies have performed poorly recently. This divergence suggests that the sell-off is not purely driven by macro factors, but also reflects weak marginal demand, thinning liquidity conditions, and ongoing deleveraging within the crypto-native market."Bitrue Research Director Andri Fauzan Adziima stated, "We have seen massive long liquidations, with hundreds of millions evaporating, funding rates remaining negative, a sharp decline in open interest, and the futures market clearly leaning bearish. Short-term holders are suffering significant losses, but long-term holders have not yet begun large-scale selling; on-chain HODL signals indicate that some are quietly accumulating during this strategic de-risking process."Adziima pointed out that the $60,000-$63,000 range is a key support area for Bitcoin. If the price can hold steady at or above this level, the market may benefit from the damage caused to shorts by negative funding rates, creating conditions for a classic "squeeze after a washout." The analyst added that potential easing of macroeconomic conditions or a return of ETF funds could further support this trend.Adziima stated that, on the other hand, if it falls below $60,000, in the worst-case scenario, an accelerated chain liquidation due to worsening macro conditions could open the door to a drop towards the mid-$55,000s or even as low as $47,000. Adziima remarked, "At that point, we might ultimately force some long-term holders to capitulate, turning this into a deeper bear market extension before the true cycle bottom arrives."

ChainCatcher message, bearish sentiment dominates the crypto market, with Bitcoin and Ethereum continuing their downward trend. In the past 24 hours, Bitcoin has fallen about 2.4% to around $66,900, while Ethereum has dropped about 2.7% below the $2,000 mark.On the macro front, the US dollar has weakened, and US Treasury yields have declined, leading to increased market expectations for a rate cut by the Federal Reserve. The Polymarket shows that the probability of a rate cut in March has risen from 7% at the beginning of the month to about 19%, while the Kalshi market is around 21%. In the derivatives market, BTC futures open interest has decreased to $15.6 billion, indicating a continued deleveraging trend, with funding rates turning negative (around -6% on Binance and about -0.5% on Bybit). The three-month basis has narrowed to 1.6%, reflecting a rapid cooling of institutional risk appetite.

Kaiko Research analysis indicates that Bitcoin fell to around $59,930 earlier this month, marking a new low since October 2024, which may signify the "midpoint" of the current bear market. The market has moved away from the post-halving frenzy phase and entered a typical bear market period that usually lasts about 12 months, paving the way for the next accumulation phase.On-chain indicators and the performance of mainstream crypto assets show that the market is approaching key technical support levels, which will determine whether the four-year cycle framework continues. The spot trading volume on major centralized exchanges has decreased from about $1 trillion in October 2025 to $700 billion in November, a drop of approximately 30%. The total open interest in Bitcoin and Ethereum futures has also decreased from $29 billion to $25 billion, indicating ongoing market deleveraging. With multi-cycle oversold indicators emerging, the question of Bitcoin's rebound is more about "when it will happen" rather than "if it will happen."

On-chain analyst Yu Jin posted on X, stating that the Yili Hua address appears to be not just deleveraging, but rather liquidating. Currently, the related address has transferred 630,400 ETH (1.294 billion USD) to Binance, leaving only 21,300 ETH (43.94 million USD) on-chain. 96% of the ETH has already been transferred to exchanges, a quantity far exceeding what would be needed for deleveraging, so it is highly likely that a complete liquidation is occurring.

Bitcoin has rebounded after experiencing a sharp decline, with the price once rising above $65,000, rebounding approximately 11% from the previous low of below $60,000. The market had previously undergone a large-scale deleveraging in a short period, with Bitcoin's pullback from its historical high of about $126,000 in October 2025 expanding to around 50%.Institutional funds are considered an important support force for this round of rebound, with the overall risk exposure of crypto hedge funds significantly increasing. The U.S. spot Bitcoin ETF recorded a record trading volume despite a certain net outflow, which is seen by the market as a clear buying on dips behavior. Analysts point out that the $58,000-$62,000 range constitutes an important short-term support zone, with around $58,000 corresponding to a key long-term moving average level. If the price maintains above this range, it may signal a short-term phase low.

According to on-chain analyst Ai Yi (@ai_9684xtpa), if Trend Research, under Yi Li Hua, were to fully deleverage its Ethereum holdings, it would need to stop-loss 320,000 ETH at the current price.Trend Research currently holds 463,000 ETH, worth approximately $998 million, with an average cost price of $3,180, and leveraged borrowing of $625 million. The current liquidation range for multiple addresses is $1,574.6 - $1,681.49, with an average liquidation price of $1,640.

Bitcoin has fallen below the $80,000 mark. Wintermute had identified $85,000 as a key pivot point for market direction in this quarter the previous week, but this level failed to support the market and instead became the upper limit for the price decline. Bitcoin subsequently touched $75,700.Wintermute's analysis indicates that this drop marks the market entering a period of extreme fear, with sentiment dominated by deleveraging and the liquidation of high-beta speculative positions. Wintermute believes that the traditional four-year halving cycle has become ineffective in the process of institutionalization, with the crypto economy shifting towards a walled garden model, concentrating liquidity in spot ETFs and large-cap assets supported by digital asset treasuries.The average duration of altcoin rebounds has compressed from 60 days in 2024 to 20 days by early 2026. Wintermute lists three major variables for market recovery, including institutional directives extending to assets like Solana and XRP, the wealth effect generated by sustained Bitcoin price increases, and the return of retail interest. Wintermute emphasizes that a true reversal may depend more on Federal Reserve policy than on narratives within the crypto industry.

The Singaporean crypto investment firm QCP Capital analyzed that after Kevin Walsh was officially recognized as the next Federal Reserve Chairman, Bitcoin fell below the $80,000 support level on Saturday, hitting a low of $74,500, while Ethereum also dropped below $2,170. The market experienced a new round of deleveraging, with over $2.5 billion in long leveraged positions being liquidated, compounded by continued outflows from ETFs, further dampening market sentiment.Risk aversion continued to spread after Walsh's appointment, affecting the stock market and extending to traditional safe-haven assets. Gold and silver prices continued to retreat as investors reassessed the policy path under Walsh's leadership, with expectations for policy normalization or tightening heating up, weakening the demand for non-yielding precious metals. Futures exchanges raised margin requirements, accelerating the liquidation of leveraged positions. Bitcoin is currently finding temporary support above $74,500, a level that coincides with the technical low of the 2025 cycle.Signals from the options market remain cautious, with a clear skew towards put options, but compared to the extreme levels during last November when Bitcoin fell from $107,000 to $80,500, the current hedging demand has eased, possibly reflecting that investors are positioning for a short-term bottom. However, market momentum remains weak, and upward potential is constrained by recent resistance levels. The future trend will largely depend on whether the $74,000 support level can be maintained.If it breaks down, it could trigger a deeper correction; if it returns above $80,000, it would help normalize volatility and option skew. The market is focused on whether institutions will reaccumulate positions near the average cost of $76,000, as well as geopolitical risks and signals from the Federal Reserve.

Tom Lee stated during the podcast "The Compound" this Thursday that the current bear market was triggered by the largest deleveraging event in crypto history that occurred last October (larger than the FTX collapse): a pricing error on a trading platform triggered a chain of automatic liquidations, resulting in over 2 million accounts being liquidated globally, one-third of market makers being destroyed, and a severe blow to the trading platform's balance sheet, causing the entire ecosystem to "limp."Tom Lee also mentioned that the selling pressure has not completely ended, similar to the recovery in 2022 which took 8-12 weeks, but there are currently no obvious signs of a rebound.

Due to the rapid pullback of spot silver prices from their highs, tokenized silver futures have become the largest clearing asset in the crypto market over the past 24 hours, unusually surpassing Bitcoin, triggering a wave of cross-market leveraged liquidations. The largest single liquidation occurred on the Hyperliquid platform, where a highly leveraged XYZ:SILVER-USD position worth $18.1 million was forcibly liquidated due to severe price fluctuations.Analysis indicates that this round of abnormal liquidations is primarily due to a significant pullback following the previous rapid rise in silver prices, coupled with exchanges raising margin requirements for precious metal futures, which has exacerbated short-term price volatility as high-leverage positions are passively deleveraging. The market is focused on whether precious metal prices can stabilize in the future and whether the liquidation spotlight will return to core assets such as Bitcoin and Ethereum.

The Bitcoin futures liquidation dominance oscillation indicator shows that the proportion of long liquidations reached 97% yesterday, with the 30-day moving average rising to 31.4%. This value indicates that almost all forced liquidations in the market came from long positions, and buyers have faced systemic pressure over the past month.Despite the price drop and a series of liquidations, the funding rate for Bitcoin perpetual contracts remains positive, with yesterday's annualized data at 43.2%. Although this indicator is below the peak of over 100% during the period from October to November, it still indicates that demand for long positions dominates the market. In the case of large-scale liquidations, maintaining a positive funding rate increases the risk of further deleveraging, suggesting that long positions in the market are recovering quickly or have not been fully liquidated. Currently, the funding rate has not shifted into a neutral or negative territory, reflecting that the derivatives market has not yet completed a thorough liquidation.