deleveraging

CryptoQuant analyst Darkfost stated that within less than a month, the open interest of BTC on the Binance platform has decreased from 10.6 billion dollars to 8.8 billion dollars, a drop of 17%. Meanwhile, its 180-day moving average has risen from 8.4 billion dollars to 8.6 billion dollars. As the open interest falls below the moving average, new signals of deleveraging are emerging in the market. In a bull market phase, this signal typically appears when market corrections are nearing their end, reflecting that traders are reducing their leveraged exposure, which includes both voluntary liquidations and forced liquidations due to insufficient margin.Aside from the fact that this process may last for months in a bear market, a similar signal last appeared in June of this year when the BTC price was below 60,000 dollars, subsequently rebounding to above 87,000 dollars, with an increase of over 45%. Currently, as the open interest declines, the market is also experiencing large-scale liquidations. Low volatility seems to encourage some traders to take on higher risks to compensate for the insufficient returns brought about by the narrowing price fluctuations, making them more susceptible to market reversal shocks. Over the past three months, the monthly liquidation scale on Binance has reached new highs since 2021: over 1.4 billion dollars in August, 1.1 billion dollars in September, and 1.3 billion dollars in October. This trend appears to continue into November, with the liquidation scale exceeding 520 million dollars before the end of the first half of this month.These data highlight the potential losses that leveraged trading can bring to investors. In a market environment with low volatility and shrinking trading volume, blindly increasing risk exposure due to a lack of patience can quickly lead to heavy costs. However, the deleveraging phase also helps improve the market environment. Reducing leveraged positions can lower the risk of cascading liquidations, allowing spot demand to play a greater role in market pricing, thereby helping Bitcoin establish a more robust market structure.

The latest monitoring report released by Morgan Stanley's prime brokerage team on Tuesday shows that global equity hedge funds staged the most intense de-risking action in over a decade during the first week of November, with a widespread wave of liquidations spreading across global markets.In the Asian market, hedge funds are controlling risk exposure through a dual strategy of reducing long positions and increasing short positions, a phenomenon particularly pronounced in the tech-heavy South Korean market. The selling pressure is mainly driven by fundamental stock-picking funds, while multi-strategy, macro, and quantitative funds are taking the opportunity to close out previous short positions, indicating a clear divergence in institutional strategies.Goldman Sachs data shows that the total leverage of U.S. fundamental long-short funds plummeted by 8.7 percentage points in a single week, marking the largest decline since the outbreak of the pandemic in March 2020; however, from the perspective of all-inclusive PB clients, the overall total leverage remains as high as 314.2%, placing it in the 85th percentile over the past year. Dubravko Lakos-Bujas, Global Market Strategy Chief at JPMorgan, believes that this round of adjustment is essentially a concentrated deleveraging by momentum traders, with capitulation-style selling already quite deep, and technical indicators suggest that short-term oversold and bottoming signals are accumulating.

Cryptocurrency analyst Darkfost stated that this round of deleveraging is driven by factors such as price declines, chain liquidations, and traders actively closing positions to reduce risk. Looking back at July this year, Ethereum also experienced a more severe contraction in open contracts, followed by stabilization and a rebound, with an increase of over 32%, and the price once breaking through 2800 USD. Deleveraging is part of the market adjustment process, and such phases are often accompanied by panic sentiment, which may also occur at the tail end of an adjustment.The overall performance of the altcoin market has been weak over the past three weeks, with Ethereum's price correcting by about 15%, and its market capitalization shrinking by approximately 54 billion USD. In the derivatives market, Binance's ETH open contract volume decreased by 1.3 billion USD in the past month, a decline of nearly 20%, dropping to 5.7 billion USD; the total amount of ETH open contracts across the network has fallen to 11.5 billion USD.

According to Gate's latest institutional weekly report, from September 21 to 27, the decline in oil prices and the easing of trade risks provided some support for U.S. stocks and crypto assets. However, the yield on the U.S. 10-year Treasury bond broke above 5%, and the high interest rate environment continues to put pressure on the valuations of risk assets. In terms of capital, the weekly net inflows for BTC and ETH ETFs were approximately $2.386 billion and $690 million, respectively, while the supply of stablecoins increased by about $1.59 billion, indicating a rebound in institutional capital and on-chain liquidity.The market trading structure remains differentiated. The weekly trading volume on Gate TradFi is about $100 billion, maintaining a high level overall; on-chain funds are further concentrated in structural opportunities such as USDC and SOL LST. In the derivatives sector, BTC rose 4.06% weekly, but the open interest across exchanges decreased by 12.81%, with funding rates turning negative temporarily, and options open interest significantly contracting, indicating signs of deleveraging in the market as prices rebound.Against the backdrop of continuous changes in capital flows and market structure, Gate institutions are continuously improving the multi-asset trading system, covering spot, contracts, stocks, ETFs, options, and other TradFi assets. They are also promoting API trading, cross-platform execution, and settlement collaboration based on infrastructures like OES and CrossEx, providing support for institutions to participate in cross-market trading and diversified asset allocation.

K33 Research Research Director Vetle Lunde analyzed that in the past 7 days, the total open interest of CME and perpetual contract BTC decreased by 49,000 contracts, marking the largest weekly decline since October 2025, during which market volatility was low and funding rates continued to decline.Unlike previous significant reductions in positions that were accompanied by forced liquidations, this round of deleveraging is more akin to proactive profit-taking, with overall market sentiment trending towards rationality.

According to on-chain analyst Axel Adler Jr., in the past 24 hours, Bitcoin's open interest (OI) has decreased by approximately 13,600 BTC, while the BTC price has remained relatively unchanged during the same period.He stated that the decline in open interest size, despite no significant drop in price, indicates that the market is actively deleveraging, which helps reduce the risk of concentrated liquidations of high-leverage positions and triggering a chain liquidation.

According to on-chain analyst Darkfost (@Darkfost_Coc), Bitcoin has just experienced the most intense deleveraging phase since 2023. The open interest on Binance has significantly dropped below the 180-day moving average, and the largest historical long and short liquidations during this cycle occurred during this period.Currently, the open interest on Binance remains at $9.6 billion, above the 180-day average of $8.3 billion, accounting for approximately 37% of the total open interest in Bitcoin, which is higher than the levels during the rebound in May—when this level helped BTC return to $82,000. Meanwhile, measured by the cumulative net buying volume over 365 days (the difference between spot buying and selling), the current buying pressure for Bitcoin has reached the strongest level since the last bear market. Analysts point out that although this adjustment has significantly impacted traders, there are signs of market recovery, providing support for a bullish rebound in Bitcoin; however, the excessively high leverage levels still need to be monitored, as they may trigger a new round of intense deleveraging.

Galaxy Research released the Q2 2026 Crypto Leverage Market Report, showing that the total amount of crypto collateralized lending decreased by 16.78% month-on-month to $56.16 billion, down 40.13% from the Q3 2025 peak of $78.69 billion. Among them, DeFi lending shrank by 27.61% month-on-month to $20.43 billion, while CeFi borrowing decreased by 9.62% month-on-month to $22.98 billion, marking the first time since Q3 2023 that CeFi volume has surpassed DeFi. Tether continues to dominate the CeFi market with a 58.54% share.The report points out that the current deleveraging differs from previous bear markets in its "orderly and moderate" pace: with consecutive quarterly declines of only 10%, 5%, and 17%, rather than the cliff-like collapse of over 55% in a single quarter as seen in 2022. In the futures market, open interest in Q2 slightly decreased by 3.08% month-on-month to $103.2 billion, but rebounded to about $114 billion in July. Regarding institutional corporate debt, Strategy completed a $1.5 billion debt buyback in May, reducing the total outstanding debt in the DAT industry to $16.1 billion. The report believes that if the market does not experience severe liquidations or counterparty defaults, deleveraging is expected to continue in a gradual step-down pattern.

Dongfang Harbor Chairman Dan Bin expressed his views this morning, stating that in July, the chip sector experienced a sharp decline and massive leveraged liquidations, but in the grand AI cycle, such a level of correction is both a necessary path and a sign of market health.The market has yet to fully understand the infinite demand potential of AI as an "intelligent" product. Concerns about capital expenditures from giants have echoed the early story of Amazon AWS, but the opportunities in AI are far greater. Funds are flowing back from low-quality tech stocks to high-quality targets, confirming the judgment of a "return of the king" by the end of 2026. Storage chips still face cyclical risks and high volatility, so it is advisable to wait for technical repairs, with a more optimistic view on fundamentally solid companies like Nvidia, Broadcom, and TSMC, as funds will flow more towards quality application layers.On the other hand, the business of hyperscale cloud providers is accelerating growth, with a large backlog of orders and an increasing growth rate, indicating that the previous punishment of capital expenditures was a misjudgment, and these investments will translate into certain future revenues. Looking ahead to August, the Nasdaq's rebound is expected to continue until Nvidia's earnings report, and the tech sector's rolling adjustment is nearing its end, with funds accelerating back into high-quality tech stocks.In terms of specific sector operations, it is currently not advisable to blindly chase high prices in the chip and storage (memory) sectors. However, investors can adopt a short-term band trading strategy of buying on dips until the storage sector completely emerges from its bottoming pattern on a technical level.

Bitwise Chief Investment Officer Matt Hougan published an analysis of the volatility of STRC under Strategy (MSTR). He believes that Strategy currently holds approximately $49.6 billion in Bitcoin and $2.6 billion in cash, with asset size far exceeding debt and preferred stock obligations, posing no liquidation risk. The company's newly launched digital credit capital framework allows it to flexibly sell Bitcoin to pay dividends based on market conditions, no longer forcing the maintenance of STRC at a par value of $100.Hougan emphasized that Strategy has been the world's largest Bitcoin buyer and a source of one-way demand over the past few years, but this situation is likely coming to an end. In the future, Strategy will flexibly buy or sell Bitcoin based on market conditions, but will not become a large-scale seller (with limited mandatory sales each year). If Bitcoin prices rebound, it may still become a net buyer. Overall, the importance of Strategy in the next cycle will be lower than in the previous cycle.He believes that the volatility of STRC reflects the process of deleveraging in the market, which is a typical characteristic at the end of a bull market. As these mismatched funds are squeezed out, the market bottom is forming, and a new bull market is expected to begin this fall.

Michael Saylor stated that he is buying Bitcoin during each downturn, and there have been 15 significant pullbacks in the past 15 years. It is not surprising to see a pullback now; this is a natural deleveraging process for the asset, occurring every 6 months to 1 year. It has already experienced 5 major pullbacks, and the decline is temporary.

Glassnode released a market weekly report stating that Bitcoin continues to exhibit characteristics of a late-stage adjustment, with recent buyers suffering significant losses and realized losses remaining high, while several major sources of demand have weakened considerably.The drop in Bitcoin's price to around $60,000 triggered a significant deleveraging event, clearing a large number of speculative positions from the market. While this helps reset leverage levels, spot demand has yet to show a substantial recovery. The options market remains defensive, with implied volatility staying high, strong demand for downside protection, and traders' positions concentrated around the current spot levels. Coupled with a decline in institutional participation and a slowdown in corporate bond accumulation, these data indicate that risk appetite remains subdued.Overall, the market seems to be further entering a phase of capitulation. Although leverage has essentially been reset and valuation metrics have reached historical lows, the demand response typically associated with long-term market lows has yet to materialize.

The cryptocurrency market experienced a new round of selling and liquidation on Thursday, with Bitcoin briefly dropping to $61,300 before rebounding to $64,680, currently reporting around $62,500. Over the past two days, the total market leverage liquidation scale was about $3 billion. Data shows that in the past 24 hours, futures trading volume rose to $305 billion, but open interest fell by 8.5% to $111.4 billion, indicating that the market is primarily deleveraging rather than adding new positions.Bitcoin's open interest fell from yesterday's historical high of over 800,000 BTC to 766,000 BTC. Investors seem to be leaving the cryptocurrency market and turning towards AI narratives in traditional markets. The derivatives market has clearly shifted to a bearish stance. The skew of BTC and ETH put options has strengthened, showing that investors are willing to pay higher premiums for downside protection. The nominal open interest of BTC put options with a strike price of $60,000 on Deribit exceeds $1 billion, while the most actively traded options contracts in the past 24 hours were the $55,000 put options.Altcoins have seen deeper declines, with NEAR, ZEC, JUP, DASH, ENA, and FET all dropping over 10%, and HYPE falling 12% after reaching a new high this week. The subsequent performance of altcoins largely depends on whether Bitcoin can hold above $60,000; if it falls below this level, it may trigger more liquidations and put greater pressure on trading pairs with weaker liquidity.

CryptoQuant analyst Darkfost tweeted that since October 10 of last year, the Bitcoin derivatives market has undergone an 8-month deleveraging process, with Binance futures positions once falling below the 180-day moving average.However, this trend began to change in early May. Binance Open Interest rebounded from $6.4 billion in March to approximately $8.96 billion currently, re-establishing itself above the 180-day moving average (around $8.75 billion), marking the basic end of the deleveraging phase.Darkfost pointed out that traders re-entering the market have provided support for the current rebound, but the macro environment remains severe, and the trend is still relatively weak.

Crypto market analyst Axel posted on social media that the BTC futures market saw a daily liquidation of approximately $526 million in shorts, and the open interest (OI) did not rebuild leverage after reaching a peak of 319,499 BTC, instead falling back to 293,045 BTC.The liquidation dominance indicator has turned positive after being in negative territory for two consecutive weeks, indicating the end of the systemic short squeeze phase. The current price remains stable in the range of 75,000-76,000 while OI contracts, forming a constructive structure of "cooling after a short squeeze," rather than a new round of overheating. The next focus will be whether OI will return above 300,000 BTC when the price attempts to break through.