Why Bitcoin Open Interest Has Seen Its Largest Decline in Almost 3 Years
Bitcoin derivatives market risk has sharply decreased, with open interest dropping 55% from over $94 billion in October 2025 to $44 billion—the largest decline since April 2023. Falling open interest signals traders are reducing leverage and curtailing speculative activity. Contributing factors include a weaker U.S. dollar, global geopolitical tensions, instability in Japanese bonds, and uncertainties about AI’s impact on tech companies. A stronger-than-expected U.S. jobs report reduced hopes for interest rate cuts, leading to significant institutional selling. A brief reprieve came after a cooler January inflation reading, causing spot buying and short covering that temporarily pushed Bitcoin above $70,000. However, the rally was not driven by fresh leveraged bets, as open interest continued to fall and funding rates turned negative. Despite the retracement of gains since the last U.S. election, some market participants continue cautious, long-term accumulation, especially if supportive regulations persist, though optimism remains subdued.
