Bitcoin Open Interest Plummets: What History Says Could Happen Next

Data shows the Bitcoin Open Interest has seen a sharp drop recently. Here’s what this could lead to, according to historical trend.

Bitcoin Open Interest Has Dropped 17% In Last Week

As explained by CryptoQuant community analyst Maartunn in a new post on X, the 7-day change in the Open Interest has been significantly negative. The “Open Interest” here refers to an indicator that measures the total amount of positions related to Bitcoin that are currently open on all derivatives exchanges.

When the value of this metric rises, it means the investors are opening up fresh positions on the market. Generally, new positions accompany more leverage, so the asset’s price can tend to become more volatile when this kind of trend develops.

On the other hand, the indicator going down suggests the derivatives holders are either closing up positions of their own volition or getting liquidated by their platform. Such a trend can lead to calmer price action.

Now, here is the chart shared by the analyst that shows the trend in the 7-day change of the Bitcoin Open Interest over the last couple of years:

As is visible in the above graph, the 7-day average of the Bitcoin Open Interest has dived into the negative zone recently, implying a large amount of positions have disappeared from the market in the past week.

More specifically, the indicator has taken a hit of around 17.8% in this window. This massive drawdown in the metric has come as BTC’s recent volatility has triggered large liquidations in the market.

In the chart, Maartunn has highlighted the instances where the sector saw deleveraging of a similar scale during the past two years. It would appear that many of these occurrences coincided with some sort of bottom for Bitcoin.

Given this pattern, it’s possible that the latest crash in the 7-day change of the Open Interest could also turn out to be a buying opportunity for the cryptocurrency.

Speaking of the futures market, the analytics firm Glassnode has shared in an X post how the futures volume has changed recently for major digital assets.

From the chart, it’s apparent that the futures volume was on the decline for Bitcoin, Ethereum, XRP, and Solana last month, but recently, the metric has reversed its trajectory.

During the past week, volume on derivatives exchanges rose for BTC, ETH, XRP, and SOL by 64%, 58%, 78%, and 58%, respectively. This is a significant value and suggests a return of speculative interest around these cryptocurrencies.

BTC Price

At the time of writing, Bitcoin is trading around $77,900, up almost 5% in the past day.