90-Day Indicator Sparks Bullish Signal for Bitcoin
While bitcoin flirts with its historical highs without managing to surpass them, a technical indicator captures experts’ attention: the 90-day open interest decline. This subtle signal could well open a strategic accumulation window.
In brief
- Bitcoin’s 90-day open interest turns negative, a first since April, signaling a phase of leveraged traders’ capitulation.
- These deleveraging phases have historically offered strategic accumulation opportunities, notably through the DCA method.
- Bitcoin trades less than 2% below its all-time high, in a favorable U.S. macroeconomic context supported by the new law adopted under Trump.
The Bitcoin Open Interest Decline Reveals a Window of Opportunity
The bitcoin derivative market analysis highlights a signal closely watched by experienced traders: the 90-day change in open interest has just turned negative, according to CryptoQuant data.
This indicator, which reflects the evolution of open positions on futures contracts, is often considered a reliable gauge of speculative pressure.
When the curve falls below zero, it generally signals a wave of forced liquidations and capitulation of traders most exposed to leverage.
Crypto analyst Darkfost nicely summarizes the situation :
Looking at past deleveraging phases especially during bull trends, they have almost consistently offered solid opportunities.
This phenomenon occurs while bitcoin trades around $109,010, less than 2% from its all-time high. Such a close resistance exacerbates tension in the derivatives markets.
Highly leveraged positions, often held by less experienced profiles, are the first to be liquidated, explaining the rapid contraction in open interest.
This technical dynamic fits within a rather supportive macroeconomic context. The U.S. Congress has just passed President Donald Trump’s landmark bill, touted as a decisive milestone for the economy.
Meanwhile, the latest employment figures came out above expectations, strengthening risk appetite across financial markets.
DCA, a Preferred Strategy During Deleveraging Phases
Bitcoin’s history shows that open interest contraction phases often provide ideal opportunities for accumulation, notably via the Dollar Cost Averaging (DCA) strategy.
By regularly purchasing fixed amounts regardless of price, investors fully benefit from these technical pullback periods.
Why are these phases favorable? Because they often mark a market purge: highly leveraged positions are liquidated, reducing artificial selling pressure. The market then becomes healthier, with price action more based on real supply and demand than speculation.
Past experience confirms this. During previous deleveraging episodes, investors maintaining their DCA systematically outperformed those who tried to time the bottom. Perfect timing is illusory in such a volatile environment. It is better to gradually expose oneself and remain disciplined.
The current context eerily resembles last April’s: a marked open interest decline then preceded a strong bullish rebound. This parallel lends weight to the signal observed today.
However, one dark spot remains: overall bitcoin demand remains fragile. Despite institutional purchases, 895,000 BTC evaporated from net demand in one month, according to CryptoQuant. This suggests the market might still be in a consolidation phase.
In summary, bitcoin is at a crossroads . The decline in open interest clears the ground, but only a sustained demand revival will allow overcoming the $112,000 resistance. For patient investors, the time is right. Others risk missing the train.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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