Bitcoin, Ethereum, XRP Hold Support Amid Waning Retail Demand

Bitcoin open interest has dropped by over 30% since October, according to on-chain analytics firm CryptoQuant. This decline is being interpreted as a sign of market deleveraging, where excessive leverage is being unwound to reduce the risk of cascading liquidations.

Ethereum and XRP have also seen similar trends, with their open interest levels declining. Ethereum's open interest is now below $41 billion, while XRP's is at $3.94 billion, both showing reduced speculative activity in the market.

Despite the drop in open interest, Bitcoin has held firm above $95,000. Spot price data suggests a potential short squeeze scenario, as leveraged short positions are being liquidated or closed.

Why Did This Happen?

The drop in open interest follows a period of intense speculation in 2025. Bitcoin's open interest reached an all-time high of over $15 billion in October, nearly tripling the $5.7 billion peak from 2021. This surge in speculative activity was accompanied by high leverage levels, which increased the risk of sharp price corrections, as seen during the October 10 crash.

Analysts note that deleveraging periods often precede market bottoms. By purging excess leverage, these corrections can create a stronger foundation for future price increases.

How Did Markets React?

Bitcoin's price action has shown signs of stabilization. The asset has risen nearly 10% since the beginning of the year, with spot buying providing support rather than reliance on leveraged positions.

Ethereum has also maintained its position above key support levels. The altcoin's price has hovered near $3,300, with technical indicators showing mixed signals. The RSI is stable at 62, but the Supertrend indicator shows a bearish bias.

XRP has been more volatile. The token fell below its 50-day EMA, with the RSI dropping to 51, signaling fading bullish momentum. However, bulls are still defending the $2 level as a key support.

What Are Analysts Watching Next?

Market observers are closely monitoring Bitcoin's ability to break above the 100-day EMA at $96,009. A sustained move above this level could increase the likelihood of a bullish recovery and potentially lead to a test of the $100,000 psychological level.

Ethereum faces a critical test at its 200-day EMA at $3,339. A break above this resistance could pave the way for further gains toward $3,658.

For XRP, a decisive break above the 50-day EMA at $2.08 would be needed to confirm a bullish turnaround. Traders are also watching for regulatory developments, as the Senate's withdrawal of the Market Structure Bill caused a short-term dip in XRP prices.

Retail demand has waned in recent weeks, as reflected in declining open interest. However, institutional buying through spot ETFs has remained strong. This week alone, spot Bitcoin ETFs recorded a net inflow of $1.81 billion, the highest weekly inflow since early October.

Analysts remain cautious. While the drop in open interest is seen as a positive sign, derivatives markets have not yet entered a structurally bullish phase. The current market environment appears to be a reactive response to the recent price correction.

Bitcoin's volatility remains compressed, approaching levels seen before significant price moves in the past. This environment suggests the potential for a breakout in either direction, depending on how the current consolidation resolves.