Bitcoin Deleveraging Signals Potential Market Reset

Bitcoin continues to consolidate below the $105,000 mark, steadfastly holding above the crucial $100,000 support level amidst ongoing market uncertainty. Despite a perceived loss of momentum from bulls, sellers also appear to be reaching exhaustion, preventing further significant price declines.

According to prominent analyst Darkfost, the market has clearly entered a deleveraging phase following a major liquidation event. This structural reset is effectively removing excessive leverage from the system, a process critical for long-term stability.

Data reveals that open interest (OI)—the total value of active futures contracts—has plummeted by 21% over the past 90 days. This marks one of the most substantial declines in the current cycle, signaling that traders are actively reducing their risk exposure and overleveraged positions are being systematically cleared. Darkfost highlights that this cooldown in leverage usage mirrors previous cleansing phases observed in September 2024 and April 2025. Historically, such periods of forced unwinding have often laid the groundwork for renewed market strength as liquidity stabilizes and speculative excesses dissipate.

Deleveraging as a Turning Point for Bitcoin

Darkfost further elaborates that the current deleveraging phase shares striking resemblances with past corrective periods that ultimately facilitated major market recoveries. During the September 2024 and April 2025 corrections, open interest saw declines of approximately 24% and 29%, respectively—levels deep enough to effectively flush out excessive speculation and restore balance to the market. With the current 21% reduction in open interest over the last three months, Bitcoin is now approaching these historical benchmarks of leverage reduction.

Importantly, Darkfost emphasizes that these phases should not be viewed as inherently bearish. Instead, they function as essential and healthy resets within broader bullish market cycles. By compelling overleveraged traders to exit and moderating speculative behavior, the market is able to rebuild upon a more robust and stable foundation. In prior cycles, such unwinding events were frequently followed by trend reversals once selling pressure eased and fresh demand began to emerge. The reduction in leverage also typically appeals to long-term investors and institutions, who seek lower-risk entry points. If Bitcoin successfully maintains its position above $100K throughout this period of structural cleanup, it could strongly indicate that the worst of the correction has passed, thereby preparing the market for a potential new impulse phase once investor confidence is fully restored.

BTC Tests Support Amidst Consolidation

A review of the weekly Bitcoin chart reveals that BTC continues to hold within a tight consolidation range, specifically between $100,000 and $105,000, actively testing key structural support. The price has consistently defended the 100-day moving average, suggesting that despite ongoing selling pressure, buyers are steadfastly stepping in around this crucial psychological zone. The overall trend remains bullish on higher timeframes, with the 200-week moving average trending upward and positioned well below current price action—a clear signal that Bitcoin’s long-term market structure remains firmly intact.

However, momentum indicators do reflect a degree of weakness, as BTC struggles to decisively reclaim the $110,000 resistance level that has capped previous rebound attempts. Trading volume has noticeably decreased since the October liquidation event, corroborating Darkfost’s observation of a market undergoing a deleveraging phase. This environment of lower volume suggests investor hesitation but also hints that forced selling may be nearing exhaustion. A decisive weekly close above $106,000 could serve as a confirmation of renewed bullish momentum, whereas a breakdown below $100,000 might potentially trigger deeper corrections, possibly towards the $92,000 level—the next significant support zone.