Bitcoin has just come through one of its toughest months this year. Its price has fallen sharply, triggering panic among traders and reflected in a steep drop in open interest. This decline, however, may signal that the market is approaching its bottom and could soon rebound.

What open interest is and why it matters

Open interest refers to the number of active futures contracts — in other words, bets on the future price of bitcoin. When it rises, more money flows into the market and speculation grows. When it falls, traders unwind positions and the market stabilizes.

That’s exactly what is happening now. According to CryptoQuant analyst Darkfosta, open interest has dropped by 1.3 million BTC over the past 30 days — the largest decline of the current cycle. In market value, that equals roughly 114 billion dollars.

Why it’s happening: sharp drops and liquidations

The price of bitcoin has fallen 20% in the past month. From its October peak above 126,000 dollars, it is now down more than 30%. Such a rapid drop heavily affects leveraged traders who often lose their positions during sudden price moves. Forced position closures — liquidations — trigger additional sell-offs.

The result is panic, reduced trading activity, and a quick outflow of money from the futures market. Analysts, however, note that clearing out overly risky positions may be a healthy signal.

A reversal ahead? The key zone is $90,000–$96,000

Crypto analyst Michaël van de Poppe says the coming week will be crucial for bitcoin. If it returns to the 90,000–96,000-dollar range, the chances of renewed growth — and potentially a new all-time high — increase significantly.

“Fear and panic were at their peak. That’s exactly when the best opportunities appear,” van de Poppe said on X.

What this means for everyday investors

The market is currently unstable and driven by emotion. The sharp decline in open interest shows that many speculators have exited the market — historically a sign that a rebound may be near. Nothing is guaranteed, and bitcoin may remain volatile. But past cycles suggest that similar setups often preceded new growth phases.

Sources:

https://cryptoquant.com/insights/quicktake/69237946e69e12693d3aac1b-BTC-Open-Interest-sees-the-sharpest-30-Day-drop-of-the-cycle

https://x.com/CryptoMichNL/status/1992685332949618698

https://cointelegraph.com/news/bitcoin-open-interest-dives-but-could-form-solid-bottom-and-set-up-renewed-bullish-trend