Bitcoin News Today: Leverage-Driven Bitcoin Reset: $700M Deleveraging Paves Rebound Path

Bitcoin's open interest has plummeted by 8,500 BTC in under 48 hours, signaling a $700 million unwind of leveraged positions and hinting at a broader market reset according to Decrypt. The selloff, driven by leveraged liquidations rather than spot selling, has pushed Bitcoin below $82,000, triggering nearly $2 billion in derivatives liquidations across exchanges like Bybit and Hyperliquid as reported by CryptoSlate. The total crypto market cap has fallen below $3 trillion for the first time in seven months, exacerbating fears of a prolonged bearish phase according to Decrypt.

The leveraged nature of the decline contrasts sharply with October's spot-driven liquidation event, according to Maarten Regterschot of CryptoQuant. "This is the first major flush since October 10, but the current drop is leverage-driven," he explained. Bitcoin's open interest, which had surged past October levels by 5,000 BTC on Thursday, has since contracted to 286,461 BTC, reflecting a sharp reduction in speculative positioning.

Ethereum and Solana longs followed Bitcoin's lead, with $183 million and $56 million in liquidations, respectively according to Decrypt. A prominent whale investor now faces $37 million in unrealized losses on Ethereum and Bitcoin longs, down from $63 million in early November according to Decrypt. Similarly, trader Jeff "Machi big brother" Huang's profits have evaporated entirely, turning a $44.8 million gain into a $20 million loss according to Decrypt.

The sell-off has been compounded by record outflows from Bitcoin ETFs, with U.S.-listed products shedding $3.79 billion in November-the largest on record according to Seeking Alpha. BlackRock's IBIT led the exodus with over $2 billion in redemptions, while Ether ETFs lost $1.79 billion according to Seeking Alpha. This trend has reduced the buffer that once absorbed forced selling from perpetual contracts, amplifying price pressure as reported by CryptoSlate.

Market sentiment remains extremely bearish, with the Crypto Fear & Greed Index entrenched in "Extreme Fear" and Myriad's perpetual sentiment market showing Fear at 49.7% according to Decrypt. Analysts like Derek Lim of Caladan note that key economic catalysts-such as the end of quantitative easing and potential U.S. stimulus-remain on the horizon but will take time to materialize according to Decrypt.

Despite the turmoil, some see potential for a rebound. Open interest's sharp 30-day drop, the steepest of the cycle, could form a "solid bottom" for Bitcoin, according to CryptoQuant's "Darkfost." Historically, such deleveraging phases have set the stage for renewed bullish trends as reported by Cointelegraph. Meanwhile, analysts like Michaël van de Poppe suggest a break above $90,000 could reignite a path toward a new all-time high as reported by Cointelegraph.

However, macro headwinds persist. The U.S. dollar's strength and rising Treasury yields continue to pressure risk assets, while thin liquidity in ETFs and derivatives markets heightens volatility as reported by CryptoSlate. For now, the market grapples with whether this is a cyclical correction or a deeper reset.

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