Bitcoin (BTC) Signals Deleverage Wave, Accumulation Around $100K Crucial

Bitcoin [BTC] is currently in a deleveraging process, as indicated by the 90-day Aggregated Open Interest Delta across 17 major exchanges.

output: As Bitcoin [BTC] continues to navigate the market, several key indicators and trends are unfolding, impacting the price movements and providing insights into the broader market dynamics.

According to the 90-day Aggregated Open Interest Delta, major exchanges are indicating a strong deleveraging trend. This usually signals an upcoming price drop or extended sideways movement in response to traders closing or liquidating their positions.

This trend is particularly evident in the Open Interest to Market Cap ratio, which has risen sharply since early 2024. This indicates a higher market risk for Bitcoin compared to the more balanced conditions during the 2021 Bull Run.

Recent activities show significant deleveraging, signaling a BTC wave of liquidations and the closure of institutional positions — akin to a liquidity reset. This higher ratio could elevate the risk of further price drops, impacting those in long positions.

Assessing liquidity zones and Trader Sentiment Gap

Further analysis reveals significant liquidity is pooled at $93,700 and $98,800. Following yesterday’s news, there was a short-term recovery for BTC followed by a decline.

This initial drop could aim for the $93,700 level to absorb this “liquid liquidity,” where buy orders are waiting. If BTC does not drop to $93.7K, it might signal strong underlying support or bullish sentiment, where buyers step in at higher levels, preventing a deeper fall. This scenario could lead to a quicker recovery or even a price surge.

Also, the Trader Sentiment Gap on the BTC showed a notable shrinkage to a lower level, especially when filtered at 0.5, which indicates a minimal sentiment gap between top traders and retail traders.

Historically, such a contraction often precedes a significant price movement. On February 12, following a gap reduction, Bitcoin's price sharply dropped from $96,650 to a low of $94,000 before rebounding.

This pattern suggests that a narrow sentiment gap may lead to initial price declines, followed by a recovery, reflecting shifts in trader behavior and market dynamics. This further supports the anticipated drop as per the deleveraging signal.

Given the current low sentiment gap, BTC might see a similar short-term volatility with potential downside followed by an upward correction.

Why accumulation around $100K is crucial for BTC

However, a significant trend where Short-Term Holders (STHs) now possess 4 million Bitcoin has emerged. This represents 46% of the 2017 peak and 86% of the 2021 peak, having accumulated 1.6 million BTC since September.

The increasing number of Short-Term Holders (STHs) contrasts with the declining distribution from Long-Term Holders (LTHs) as seen in their decreasing share of the total BTC supply.

This shows BTC continues to accumulate around the $90K – $100K price range. This consolidation could suggest seller exhaustion, providing a stable base for a potential continuation of the rally.

As BTC stabilizes, the market could gain confidence, reducing the likelihood of sudden sell-offs. This would set the stage for a sustained uptrend after the deleveraging is over.