Bitcoin Open Interest (OI), mainly linked to futures markets, represents the total dollar value of open contracts not closed.
On October 7, 2025, coinciding with Bitcoin’s latest ATH, Open Interest peaked at approximately $47.5 billion
Since then, OI has declined to around $21.6 billion, a contraction of 54.53%
This sharp decline in Open Interest over the past 4.5 months is due to:
Bitcoin’s price decline: the post-ATH correction triggered closures and liquidations of leveraged positions, significantly reducing speculative derivatives activity
Smaller notional contract size: as BTC’s price falls, the dollar value of open positions decreases, even if the number of contracts does not change proportionally
Structural deleveraging: after a phase of euphoria, the market enters a purge process where excess risk and leverage are removed
This OI compression suggests a cleansing of the speculative excess that dominated at the all-time high. Historically, such decompression reduces market fragility and lowers the probability of short-term liquidation cascades
Structurally, the market is now less leveraged and potentially more stable from a derivatives perspective — clearly visible in the attached chart, where OI contraction is progressive and sustained after the ATH.
Additionally, excessive liquidations tend to become less frequent under these conditions, as they usually occur when there is a strong imbalance in Open Interest toward longs or shorts, especially when total liquidation size is elevated. With OI significantly compressed, the impact of large-scale liquidation events declines.
The key variable going forward is whether Open Interest expands alongside sustained price recovery and spot absorption — signaling structural trend rebuilding — or if OI growth resumes in a premature, highly leveraged manner, increasing market fragility again. The quality of the next OI expansion will determine whether we enter a healthy accumulation phase or a new speculative cycle
Written by Carmelo_Alemán