A recent open interest shakeout of nearly $12 billion in Bitcoin could be the necessary trigger for the cryptocurrency to regain its upward trajectory, as suggested by a crypto analyst.
“This situation can be seen as a natural market reset, which is a crucial phase for maintaining a bullish continuation,” noted CryptoQuant contributor DarkFost in a market report dated March 17.
The analyst added, “Historically, each instance of deleveraging like this has presented solid opportunities for the short to medium term.”
According to CoinGlass, Bitcoin’s (BTC) open interest (OI) — which measures the total number of unsettled Bitcoin derivative contracts including options and futures — was at $61.42 billion on February 20. However, it then fell by 19% to $49.71 billion by March 4.
Bitcoin’s open interest is recorded at $49.02 billion at the time of this publication. Source: CoinGlass
This drop occurred amid fluctuating prices influenced by uncertainties regarding tariffs imposed by US President Donald Trump and concerns over US interest rate trajectories.
“After the recent turmoil prompted by political instability tied to Trump’s decisions, we saw a significant liquidation of leveraged Bitcoin positions,” stated DarkFost.
During this two-week span, Bitcoin’s price fell below two critical thresholds, bringing it closer to the levels observed following Trump’s election victory in November.
On February 25, Bitcoin’s price fell beneath $90,000, and just two days later, on February 27, it dipped below $80,000 for the first time since November. According to CoinMarketCap data, it is currently trading at $83,400.
Bitcoin has decreased by 14.58% over the past 30 days. Source: CoinMarketCap
Ryan Lee, chief analyst at Bitget, recently shared with Cointelegraph that with Bitcoin trading in the low $80,000s, both its price and open interest may experience increased volatility should the March 19 Federal Open Market Committee meeting yield any surprises.
“The market predominantly anticipates that the Fed will maintain steady rates; however, any unanticipated hawkish signals could exert pressure on Bitcoin and similar risk assets,” he added.
Related: Bitcoin experiencing ‘shakeout,’ not end of 4-year cycle: Analysts
Presently, markets are pricing in a 99% likelihood that the Fed will keep interest rates unchanged, based on the latest projections from the CME Group’s FedWatch tool.
At the time of writing, Bitcoin’s open interest stands at $49.02 billion, reflecting an approximate 6.5% increase over the past five days.
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This article does not provide investment advice or recommendations. All investments and trading activities carry risks, and readers should conduct their own research before making financial decisions.
