Bitcoin Undergoing Healthy Market Reset as Leverage Flushes Out Bitcoin is currently navigating a significant deleveraging phase, with open interest in futures contracts dropping by a notable 21% over the past three months. This period of market adjustment is historically seen as a crucial cleansing event, flushing out excessive risk and setting the stage for potential future growth. Despite recent market uncertainties, Bitcoin has demonstrated resilience, consolidating above the critical $100,000 support level.
Market Resets: A Precursor to Recovery
According to leading analyst Darkfosto, the cryptocurrency market has entered a structured deleveraging phase, akin to previous periods of correction observed in September 2024 and April 2025. These past events saw similar significant drops in open interest (around 24% and 29% respectively), effectively clearing out speculative positions and restoring market balance. The current 21% decline signifies a similar pattern of traders reducing their risk exposure and liquidating overleveraged positions, contributing to a healthier market structure. Historically, such forced unwinding events have often preceded new periods of market strength. By cooling down speculative behavior and stabilizing liquidity, these deleveraging phases attract long-term investors and institutions seeking more secure entry points. This process allows Bitcoin to rebuild on a more stable foundation, preparing for a potential new impulse phase once market confidence returns and selling pressure exhausts.
Bitcoin's Consolidation and Key Levels
Currently, Bitcoin is consolidating within a tight range of $100,000 to $105,000 on the weekly chart. The price has consistently defended its 100-day moving average, signaling persistent buying interest around this psychological zone despite sustained selling pressure. While short-term momentum indicators suggest weakness and a struggle to reclaim the $110,000 resistance, the overall long-term market structure remains robust, with the 200-week moving average trending upward well below current price action. The decline in trading volume since the October liquidation event further supports the narrative of a deleveraging phase where forced selling is nearing exhaustion. For renewed bullish momentum, a decisive weekly close above $106,000 would be a significant indicator. Conversely, a breakdown below the $100,000 support could trigger deeper corrections, potentially pushing prices towards the next major support zone around $92,000. The market is closely watching these levels as it seeks to confirm the end of this corrective phase and the potential for an upward trajectory.
