Supporting the claim of reduced leverage, XWIN Research highlighted that open interest in the Bitcoin future market has reduced significantly since late October. This decline in open interest signals the exit of short-term traders from their leveraged positions.
The blockchain firm noted that, in past cycle peaks, leveraged trades often increased even at high price levels. However, this euphoric buildup of market positions is not currently the case for Bitcoin, meaning that a cycle top is likely not what is being witnessed.
As of this writing, Bitcoin is valued at around $101,930, reflecting no significant movement in the past 24 hours. The flagship cryptocurrency is deep in the red on the weekly timeframe, though, having suffered an 8% price decline in the last seven days.
Despite the weakened institutional demand for BTC, XWIN Research highlighted some positive signs that could contribute to the cryptocurrency’s eventual recovery. For instance, the DeFi firm revealed that Bitcoin exchange reserves remain at multi-year lows, meaning that a limited supply is still available.
Additionally, stablecoin liquidity is gradually flowing back into the market; this means that purchasing power is also returning, and investors might just be waiting for the right time. However, XWIN Research noted that, despite the obvious market resilience, the current sentiment suggests a range-bound movement in the short term.
