Cryptocurrency analysts note that significant “deleveraging” signals have been observed in the derivatives market over the past three months, and this reshaping of the market structure could indicate a possible bottom formation.
CryptoQuant, a cryptocurrency data platform, has reported that the amount of open interest in the Bitcoin derivatives market has steadily declined over the past three months, and leverage ratios in the market have gradually decreased. This process is said to be laying the groundwork for a healthier and upward turnaround in the overall market structure.
According to shared data, open positions in Bitcoin derivatives have decreased by approximately 31% since October of last year. This is considered a clear “deleveraging” signal, helping to clear excessively leveraged positions accumulated in the market. CryptoQuant also included the views of analyst Darkfost, who explained that historical data shows that such periods of deleveraging often coincide with the formation of significant market lows. According to Darkfost, this process resets the market equilibrium, creating a more solid foundation for a potential bull market recovery.
However, the analyst added that this scenario is not guaranteed. He warned that if the decline in Bitcoin price continues and the market enters a full-blown bear trend, open positions could narrow further, leading to a deeper deleveraging process and additional corrections.
*This is not investment advice.