OI Drops 21% As Excess Risk Is Flushed Out

Bitcoin continues to consolidate below the $105,000 mark, maintaining stability above the key $100,000 support level despite ongoing market uncertainty. Bulls appear to be losing momentum, yet sellers are showing signs of exhaustion as the price resists further decline. According to top analyst Darkfost, the market has entered a clear deleveraging phase following the major liquidation event on October 10 — a structural reset that is removing excessive leverage from the system.

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Data shows that open interest — the total value of active futures contracts — has fallen by 21% over the past 90 days, marking one of the steepest declines of the cycle. This drop reflects traders reducing risk exposure and liquidations steadily clearing overleveraged positions.

Darkfost notes that leverage usage is gradually cooling down, with the current drawdown echoing previous cleansing phases seen in September 2024 and April 2025. Historically, such periods of forced unwinding have preceded new market strength as liquidity stabilizes and speculative excess fades.

Deleveraging Signals a Potential Turning Point for Bitcoin

Darkfost explains that the current deleveraging phase bears striking similarities to previous corrective periods that ultimately paved the way for major recoveries. During the September 2024 and April 2025 corrections, open interest fell by approximately 24% and 29%, respectively — deep enough to flush out excessive speculation and restore balance across the market.

With the current 21% decline in open interest over the last three months, Bitcoin is now approaching those same historical levels of leverage reduction. According to Darkfost, these phases are not necessarily bearish; instead, they serve as healthy resets during bullish market cycles. By forcing overleveraged traders to exit and cooling down speculative behavior, the market is able to rebuild on a stronger, more stable foundation.

In past cycles, such unwinding events were often followed by trend reversals once selling pressure eased and new demand emerged. The reduction in leverage also tends to attract long-term investors and institutions seeking lower-risk entry points.

If Bitcoin continues to hold its ground above $100K through this period of structural cleanup, it could signal that the worst of the correction is over, setting the stage for a potential new impulse phase once confidence returns.

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