• Bitcoin Open Interest drops $10B, signaling a major market reset and potential bullish reversal.
• Past patterns show similar leverage wipeouts led to strong rallies after funding rates stabilized.
• Geopolitical tensions and macro shifts contributed to the decline, impacting trader sentiment and risk exposure.

Bitcoin’s futures market just faced a massive shakeup. Over $10 billion in Open Interest vanished since January 2025. The decline followed a peak of $33 billion on January 17, when leverage hit record highs. Market-wide liquidations and global uncertainty fueled the sudden drop. Analysts believe this shakeout could reset conditions for Bitcoin’s next big move. A similar pattern played out before past bull runs. Could this be another setup for a rally?

Bitcoin’s History Shows a Pattern

Bitcoin — BTC, has gone through major leverage resets before. A similar event happened in March 2024 when Bitcoin fell from $69,000 to $59,700. That drop forced over $1 billion in liquidations. The sell-off also reset Funding Rates, helping Bitcoin recover later that year. Analysts see this latest decline as a natural part of the market cycle.

When leverage builds up too much, corrections follow. External factors like geopolitical tensions and economic shifts added more pressure. Donald Trump’s recent comments on crypto also affected traders. His promise to end “Joe Biden’s war on Bitcoin” stirred reactions across the market.

Funding Rates Confirm a Market Shift

Funding Rate trends often reveal how traders react to leverage resets. During December 2024 and January 2025, consistently high rates showed strong demand for long positions. By early February, those rates turned negative for the first time in months.

That shift happened just as Bitcoin peaked at $101,440. By March 2, Funding Rates dropped even further. The decline confirmed that traders closed leveraged positions or faced forced liquidations. This pattern mirrors March 2024, when Funding Rates collapsed from extreme highs to below 20%.

That shift signaled the end of an overheated market and set the stage for a recovery. For now, Bitcoin’s past shows that major deleveraging events often lead to stronger price action. If history repeats, a fresh rally could be on the way.

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