Analysis: Deleveraging Process Accelerates, Binance’s Bitcoin Open Interest Positions Fall 17% in One Month

CryptoQuant analyst Darkfost noted in a recent post that BTC open interest on Binance has fallen 17% from $10.6 billion to $8.8 billion in less than a month. Meanwhile, its 180-day moving average has risen from $8.4 billion to $8.6 billion. With open interest dropping below the moving average, the market is showing new deleveraging signals. In bull markets, this signal typically emerges near the end of a market correction, reflecting traders cutting leveraged exposure—both through voluntary position closures and forced liquidations due to insufficient margin. Outside of bear markets where this process can drag on for months, the last similar signal occurred in June this year, when BTC traded below $60,000 before rallying to over $87,000, a gain of more than 45%. Alongside the current open interest decline, the market has also seen massive liquidations. Low volatility appears to have pushed some traders to take on higher risks to offset insufficient returns from narrowed price swings, leaving them more exposed to market reversals. Over the past three months, Binance’s monthly liquidation volumes have hit their highest levels since 2021: over $1.4 billion in August, $1.1 billion in September, and $1.3 billion in October. This trend is continuing in November; as of the end of the first half of the month, liquidations have already exceeded $520 million. These figures underscore the potential losses leveraged trading can inflict on investors. In a market environment marked by low volatility and shrinking trading volumes, blindly increasing risk exposure out of impatience can quickly lead to heavy costs. That said, the deleveraging phase also helps improve market conditions. Reduced leveraged positions lower the risk of cascading liquidations, allowing spot demand to play a larger role in market pricing, thereby helping Bitcoin build a more robust market structure.