#Strategy加仓BTC Bitcoin contracts shrink by 30%. Is this wave of market correction a bottoming or a rebound?

According to CryptoQuant data, Bitcoin open interest has fallen by about 30% from the all-time high of $15 billion in October last year. It sounds quite alarming, but it’s important to understand what’s really happening behind the scenes.

Market deleveraging, in simple terms, is about clearing out over-leveraged positions. Historically, significant declines in contracts often signal a bottom. Why? Because those forced long liquidations disappear, and the market’s short-selling pressure diminishes.

Now, there’s an interesting phenomenon: prices are rising, but contract balances are shrinking. This is no coincidence—it clearly indicates short sellers are being forced to close their positions. To put it plainly, this is a classic "short squeeze." Most importantly, this rebound isn’t driven by leverage stacking but by genuine spot buying. Are the qualities the same? Definitely not.

But don’t get too optimistic. Based on structural analysis of the derivatives market, we are still far from entering a bull phase. Currently, it’s more about a passive correction of price volatility. If the price weakens again, contracts may continue to shrink, and the entire adjustment cycle could be prolonged.

How do we view this wave of market activity? In the short term, selling pressure is easing, and a rebound driven by spot buying has a chance—this is worth paying attention to. But for a major rally to truly start, both fundamentals and capital flows need to support it. It’s not time to celebrate yet. $BTC