The Dramatic Shift in Bitcoin Futures Amid Price Volatility
Over the past two weeks, the Bitcoin futures market has experienced a “deleveraging” storm of more than $10 billion. According to a report released by the on-chain analysis platform CryptoQuant on March 17, from February 20 to March 4, the open interest (OI) of Bitcoin futures dropped sharply from the historical high of US$33 billion to US$22 billion, a drop of 33%. This phenomenon is seen by analysts as a “natural reset” of the market, which may lay the foundation for a subsequent rebound in Bitcoin prices.
This deleveraging is closely related to the sharp fluctuations in Bitcoin prices. In mid-January, the price of Bitcoin hit an all-time high of $84,214, but then the high leverage in the market triggered a series of liquidations, and the price retreated to below $70,000. CryptoQuant pointed out that the current 90-day open interest change rate of Bitcoin futures has fallen to -14%, close to the level during the mid-term adjustment period of the 2021 bull market. Historical data shows that similar market “leverage liquidation” often creates opportunities for short- to medium-term price recoveries.
Structural Shift in Futures Markets: From Frenzy to Rationality
The deleveraging in Bitcoin futures is not only reflected in the sharp decline in open interest but also in the shift in traders’ risk appetite. Since November 2024, stablecoin reserves on derivatives exchanges have continued to rise, even surpassing spot markets. However, CryptoQuant analyst Kriptolik pointed out that this influx of capital has not translated into price gains, instead exposing a “demand crisis” in spot markets—investors are increasingly favoring high-leverage futures contracts for short-term speculation rather than long-term Bitcoin holdings.
This trend contrasts sharply with Bitcoin’s historical performance. For example, in January 2018, Bitcoin’s price halved from 19,000tobelow10,000 due to regulatory concerns in South Korea, at a time when the futures market was still in its infancy. In June 2024, Bitcoin broke through $71,000 amid weak labor data, while futures open interest saw synchronous growth, highlighting the complex relationship between market sentiment and leverage strategies.
Futures Expiry and Price Volatility: History Repeating?
The recent deleveraging event has reignited discussions about the relationship between futures contract expirations and Bitcoin price movements. Thomas Lee, head of research at Fundstrat, previously noted that Bitcoin prices tend to drop by an average of 18% in the 10 days leading up to futures expirations and gradually recover in the six days following. A similar pattern was evident during the early days of CBOE Bitcoin futures in 2018, when expirations often coincided with price swings exceeding 20%.
What makes the current market unique is the coexistence of deleveraging and increased institutional participation. For instance, CME Bitcoin futures open interest surged sevenfold to $46 billion in 2024, while Ethereum futures trading volume briefly surpassed Bitcoin’s, indicating the overall expansion of the crypto derivatives market even as Bitcoin’s dominance faces challenges.
Analyst Divergence: Short-Term Risks vs. Long-Term Opportunities
Facing this market reset, analysts are divided on Bitcoin’s short-term price trajectory. On-chain data shows that despite the decline in futures market leverage, Bitcoin reserves on spot exchanges continue to flow out, suggesting that long-term holders are still accumulating. CryptoQuant analyst Darkfost believes that Bitcoin’s current support level is around 70,000,andabreakabovethe75,000 resistance could signal the start of a new upward cycle.
However, some traders remain cautious about excessive optimism. Prominent analyst Michaël van de Poppe predicts Bitcoin could hit $95,000 by the end of August 2024, but the surge in short positions indicates lingering concerns about a near-term pullback. Additionally, the divergence between stablecoin lending rates and futures premiums underscores the market’s reliance on “spot holding + futures shorting” arbitrage strategies, a structural contradiction that could hinder Bitcoin’s rapid recovery.
Future Outlook: A New Market Equilibrium Post-Deleveraging
Despite heightened short-term volatility, most analysts view this deleveraging as a necessary phase for the healthy development of the Bitcoin market. Historical precedents suggest that clearing excessive leverage often sets the stage for a new bull run—for example, Ethereum futures trading surged in 2021 after a similar market reset.
For Bitcoin prices, key variables remain the macroeconomic environment and regulatory developments. If expectations of a Federal Reserve rate cut intensify or institutional investors increase Bitcoin holdings through spot ETFs, market confidence could recover more quickly. Meanwhile, the ongoing compliance efforts of derivatives exchanges (such as the regulatory frameworks of CME and CBOE) will provide long-term stability for Bitcoin prices.
In conclusion, this $10 billion deleveraging storm represents both a correction of excessive speculation in the Bitcoin market and a potential prelude to the next bull run. As an anonymous trader aptly put it on social media: “The market needs to breathe, and Bitcoin prices need to consolidate—only then can the next leap forward be more solid.
