TLDR:

Bitcoin’s open interest plunged $12B in a week, marking one of the largest futures contractions this year.
Funding rates briefly turned negative during Friday’s sell-off before stabilizing in modestly positive territory.
Bitcoin’s leverage ratio dropped to levels unseen since 2022, showing mass deleveraging across exchanges.
Stablecoin supply ratio fell to April lows, signaling increased buying power waiting to re-enter the market.

The crypto market lately faced one of its sharpest pullbacks in recent memory. 

Bitcoin’s price correction wiped billions from leveraged positions and sent traders scrambling to reduce risk. It’s the kind of reset that shakes confidence in the short term but may set the stage for future recovery. 

Market watchers are now debating whether this shakeout marks the end of overheated speculation or the start of a new accumulation phase.

Data shared by CryptoQuant shows Bitcoin’s open interest plunged by $12 billion in a week, sliding from $47 billion to $35 billion. The sudden decline points to widespread liquidation of leveraged bets after prices hit recent highs. 

Analysts say this is one of the steepest drops in open interest seen in months, signaling deep stress in derivatives markets.

According to on-chain analyst EgyHash on CryptoQuant, the event “reset leveraged positioning across the board.” He added that such cleanouts often clear the way for healthier market structures and eventual uptrends once volatility cools.

Bitcoin Leverage and Funding Rates Show Market Reset

Funding rates, which track the cost of holding leveraged futures, briefly flipped negative during Friday’s sell-off. That move suggested traders were paying a premium to short Bitcoin, a typical sign of panic. 

However, by early Monday, those rates turned mildly positive again, hinting that sentiment may be normalizing.

The Estimated Leverage Ratio (ELR) also dropped sharply, reflecting that traders have reduced borrowed exposure across major exchanges. This ratio, which hit its highest level since 2022 before the correction, is now at a healthier range. That signals reduced risk of forced liquidations if prices swing again.

Meanwhile, Bitcoin’s Stablecoin Supply Ratio (SSR) fell to its lowest level since April. A lower SSR means more stablecoins are sitting idle, increasing potential buying power. It shows that liquidity has moved to the sidelines, waiting for better entry points.

CoinGecko data shows Bitcoin trading at $115,122, up 2.93% in the past 24 hours but still down 7.05% over the week. Daily volume hit $93.5 billion, reflecting heavy rotation as traders reposition after the crash.

Bitcoin price on CoinGecko

Market Context: Pain Now, Possible Gain Ahead

Historically, deep deleveraging phases like this have marked turning points in Bitcoin’s long-term cycle. 

After excess leverage drains out, prices often stabilize before building higher support zones. While no one can call the bottom with certainty, data patterns suggest the market has flushed out speculative froth.

CryptoQuant’s report described the move as one of the broadest resets since 2021, when a similar wipeout preceded months of steady recovery. Traders now seem more cautious, with derivatives exposure trimmed and cash reserves growing in stablecoins.

In short, Bitcoin’s reset has created pain for leveraged players but opened a cleaner slate for the next cycle. 

Whether it sparks a sustained recovery or a longer consolidation remains to be seen, but this week’s data paints a clear message: leverage has been drained, and the market is ready to rebuild.

The post Bitcoin Lost $12B in Futures, Now the Market’s Bracing for What Comes Next appeared first on Blockonomi.

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Filed under: Bitcoin - @ October 13, 2025 10:24 am