Analysis: Deleveraging process accelerates, Binance Bitcoin open interest positions drop 17% in a month.

BlockBeats news, November 12 - CryptoQuant analyst Darkfost stated in a post that within less than a month, the BTC open interest on the Binance platform has dropped from $10.6 billion to $8.8 billion, a decrease of 17%. Meanwhile, its 180-day moving average rose from $8.4 billion to $8.6 billion. As open interest falls below the moving average, new deleveraging signals are emerging in the market.

During bull market phases, this signal typically appears near the end of a market correction, reflecting traders reducing leveraged exposure, including both proactive position closures and forced liquidations due to insufficient margin. Except in bear markets where this process may last for months, the last similar signal occurred in June this year, when BTC price was below $60,000 and subsequently rebounded above $87,000, a gain of over 45%.

The current decline in open interest coincides with large-scale liquidations in the market. Low volatility appears to have prompted some traders to take on higher risks to compensate for insufficient returns from narrowed price fluctuations, making them more vulnerable to market reversals. Over the past three months, Binance's monthly liquidation scale has hit new highs since 2021: over $1.4 billion in August, $1.1 billion in September, and $1.3 billion in October. This trend seems to be continuing in November, with liquidations exceeding $520 million before the end of the first half of the month.

These data highlight the potential losses leveraged trading can bring to investors. In a market environment of low volatility and shrinking trading volume, blindly increasing risk exposure out of impatience may quickly exact a heavy price. However, the deleveraging phase also helps improve the market environment. Reduced leveraged positions can lower the risk of cascading liquidations, allowing spot demand to play a greater role in market pricing, thereby helping Bitcoin establish a more robust market structure.