According to CryptoQuant, open interest in Bitcoin derivatives markets has declined over the past three months, leading to declining leverage that has develop into bullish for the general market structure.
A 31% drop in open interest (OI) in Bitcoin derivatives since October is a “deleveraging signal” that helps reduce excess leverage built up available in the market, the on-chain analytics provider said on Wednesday.
“Historically, they’ve often marked significant bottoms, effectively resetting the market and making a stronger base for a possible bullish recovery,” said crypto analyst “Darkfost,” quoted within the post.
The analyst said this might occur again, but warned that if Bitcoin (BTC) continues to slip and enters a full bear market, “open interest could proceed to shrink, indicating greater deleveraging and a possible extension of the correction.”
OI refers back to the number or value of crypto derivative contracts which have yet to settle and remain “open.” Deleveraging is the liquidation of dangerous positions, thereby reducing the danger of cascading liquidations that would trigger sharp price declines, as was the case within the October 10 crash.
Bitcoin OI has fallen by greater than 30% since October. Source: CryptoQuant
Open interest in Bitcoin tripled in 2025
The “speculative frenzy” in crypto derivatives over the past 12 months has led to a surge in open interest in Bitcoin, which hit an all-time high of over $15 billion on October 6, the analyst noted.
During the previous bull market peak in November 2021, BTC open interest on Binance reached a high of $5.7 billion, meaning OI has almost tripled in 2025.
During a price rally with falling open interest, this often signifies that leveraged short positions are liquidated or closed.
Traders who bet against Bitcoin sell their positions at a loss, removing selling pressure from the market. This “short squeeze” scenario could be bullish because it suggests that the value increase is being driven by spot buying moderately than excessive leverage, making the rally more sustainable.
This appears to be the case currently as spot BTC prices have increased by almost 10% for the reason that starting of this 12 months.
Derivatives aren’t yet in a bull market
According to CoinGlass, total Bitcoin OI across all exchanges and all derivatives markets is currently around $65 billion. This is down around 28% from its peak of just over $90 billion in early October, consistent with CryptoQuant's percentage decline numbers.
In the Deribit Bitcoin options markets, OI is highest on the $100,000 strike price, which has a notional value of $2.2 billion, suggesting traders are bullish as there are more long bets (calls) than short bets (puts).
However, the derivatives market has “not yet entered a structural upward phase,” crypto derivatives provider Greeks Live reported on Wednesday.
“The current trading structure appears to be more of a reactive response to the sudden increase, with the long-term outlook still not shifting towards a bull market,” they added.
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