📉➡️📈 Leverage is quietly exiting, and the market's foundation is being rebuilt

Recently, some data points are worth paying attention to. The latest report from an on-chain analysis platform shows that open interest in Bitcoin derivatives has been declining over the past three months. More intuitively, since October last year, this number has cumulatively fallen by 31%.

An obvious phenomenon: the market is actively "deleveraging."

This may sound like a bad thing. But in reality? The situation is not that simple.

**Bubbles are squeezed out, allowing the ecosystem to be healthy**

Markets with high leverage have a characteristic — they rise quickly and fall just as fast. Like inflating a balloon, the fuller it is, the bigger the explosion when it pops.

What does the continuous decline in OI mean? Liquidation positions are gradually being cleared out, passive selling pressure is weakening, and spot buying is beginning to take center stage. In other words, short-term speculative positions are fading, and genuine buying power is emerging.

This shift is actually quite crucial. When the market no longer relies on leverage to drive prices, volatility becomes more resilient, and price movements better reflect true supply and demand.

**History gives us clues**

Looking back at past market cycles, a pattern appears quite frequently — periods of large-scale deleveraging are often not the end of a bull market, but rather the starting point of a new rally.

This may sound paradoxical. But it’s not complicated to understand: it’s not that leverage is increased because prices are about to rise, but rather, after deleveraging, the market has a solid foundation to rise again. Think of it like repairing the foundation of a house before building upwards. Same logic applies.

**Long-term players will feel more comfortable**

As speculative positions decrease, the true driving force behind price movements shifts. The flavor of capital allocation becomes more prominent, spot buying becomes mainstream, and fundamental long-term logic begins to take effect.

This is genuinely good news for those who want to go through a full bull-bear cycle. The market’s "signal-to-noise ratio" improves; not all volatility is caused by the shock of liquidation.

**But risks must also be openly discussed**

Deleveraging does not mean an immediate surge. This must be clarified. During the deleveraging phase, the market’s common rhythm is actually: sideways movement, repeated oscillations, and grinding through time. Short-term traders will find this phase particularly uncomfortable because there are no big swings, and opportunities for quick profits diminish.

Another risk to watch out for is that if prices continue to weaken, open contracts may keep being pushed down, leading the market into a deeper correction cycle. This is not just a hypothetical; it’s a variable that requires close observation.

**The core of the core**

What is the market doing right now? Simply put, it’s cleaning out the leverage that shouldn’t exist. This is not friendly to those seeking quick gains, but for those aiming to establish a healthy trading rhythm, everything happening now is very meaningful.

Remember one thing: without healthy deleveraging, a truly sustainable bull market cannot be built.

When the market begins to "slow down," it’s often not heading toward the end, but quietly accumulating energy for the next big move.