Bitcoin's 90-Day Open Interest Turns Negative Amid Leveraged Trader Capitulation

Bitcoin's 90-day open interest has turned negative, marking the first time since April. This shift signals a phase of capitulation among leveraged traders, as highlighted by CryptoQuant data. This indicator, which tracks the evolution of open positions on futures contracts, is seen as a reliable gauge of speculative pressure. When the curve dips below zero, it typically indicates a wave of forced liquidations, affecting traders with high leverage exposure.

Crypto analyst Darkfost notes that past deleveraging phases, especially during bull trends, have consistently offered solid opportunities. This phenomenon is occurring as Bitcoin trades around $109,010, just 2% below its all-time high. The proximity to this resistance level intensifies tension in the derivatives markets, leading to the rapid contraction of open interest as highly leveraged positions are liquidated.

This technical dynamic is supported by a favorable macroeconomic context. The U.S. Congress has recently passed a landmark bill, which is seen as a significant milestone for the economy. Additionally, the latest employment figures exceeded expectations, bolstering risk appetite across financial markets.

Historically, phases of open interest contraction have provided ideal opportunities for accumulation, particularly through the Dollar Cost Averaging (DCA) strategy. By regularly purchasing fixed amounts regardless of price, investors can fully benefit from these technical pullback periods. These phases often mark a market purge, where highly leveraged positions are liquidated, reducing artificial selling pressure and making the market healthier. Past experience shows that investors maintaining their DCA strategy during these episodes have systematically outperformed those trying to time the bottom.

The current context resembles last April, when a marked open interest decline preceded a strong bullish rebound. This parallel strengthens the signal observed today. However, overall Bitcoin demand remains fragile. Despite institutional purchases, a significant amount of Bitcoin has evaporated from net demand in one month, suggesting the market might still be in a consolidation phase.

In summary, the decline in open interest clears the ground, but only a sustained demand revival will allow overcoming the $112,000 resistance. For patient investors, the time is right. Others risk missing the opportunity.

Bitcoin's 90-day Spot Cumulative Volume Delta (CVD) has turned positive, indicating strong buy-side dominance in the market. This shift suggests significant buying pressure, which could drive Bitcoin's price higher in the coming days. The positive 90-day CVD signal aligns with Bitcoin's recent price performance, which has surged by 31.60% over the past 90 days, driven by global liquidity trends and central bank policies that have increased market liquidity. This surge has brought Bitcoin closer to its all-time high, which it reached in May. Currently, Bitcoin is just 2% away from its peak valuation of $111,814, indicating that it is on the cusp of potentially breaking new records.

Analysts have noted that Bitcoin's price movements often follow a reliable 4-year cycle centered around the Bitcoin Halving. According to this cycle, the current period is still within a potentially bullish phase, which could extend into the future. This long-term bullish outlook, combined with the recent positive 90-day indicator, suggests that Bitcoin may continue to rise in the near term.

The bullish sentiment is further supported by the fact that Bitcoin has triggered a Tom Demark (TD) Sequential sell-signal on the quarterly chart. This signal, while typically indicating a potential drop, has historically been a precursor to significant price increases. The market's reaction to this signal has been positive, with many investors viewing it as a buying opportunity rather than a cause for concern.

In addition to Bitcoin, other cryptocurrencies such as Litecoin have also shown bullish signs. Despite a recent price dip below $90, Litecoin's 90-day Spot Cumulative Volume Delta has turned positive, indicating buy-side dominance. This suggests that the broader cryptocurrency market is experiencing a bullish trend, which could further support Bitcoin's price movements.

Overall, the 90-day indicator's bullish signal for Bitcoin, combined with its recent price performance and long-term bullish outlook, suggests that the cryptocurrency is poised for further gains. Investors and analysts are closely monitoring these developments, and the market's reaction to these signals will be crucial in determining Bitcoin's future price movements.