Open interest for Bitcoin and Ethereum futures plummets, potentially indicating a washout of leverage

Recent CryptoQuant data reveals a pronounced decline in Bitcoin and Ethereum futures open interest — suggesting a potential leverage washout — as speculative positions are unwound.

"In total, positions worth $1.368 billion have been closed across both instruments, and a partial market reset has been completed," CryptoQuant analyst Alex Adler said in a post on X.com. This significant reduction in open interest could potentially stabilize the market by reducing excessive speculative activity.

Adding to this picture, total crypto liquidations in the past 24 hours have reached around $949.50 million. Notably, long liquidations have accounted for about $734.26 million, compared to $215.24 million on the short side, according to Coinglass data.

Bitcoin CME Gap as a price magnet

Additionally, a pivotal technical factor in the current market landscape is the Bitcoin CME gap. According to MMConsult co-founder Christopher Jaszczynski, Monday's Bitcoin downturn saw the digital asset's CME futures price drop to approximately $76,700, effectively filling the gap that had been present since November 5, 2024.

Despite this, a remaining unfilled gap persists between $84,200 and $85,900, drawing significant market attention. The clustering of orders between the $84,200 and $85,900 range could act as a magnet, drawing the price back to "fill" the gap. In effect, the gap level becomes a temporary support, leading to a potential retracement.

For context, CME Bitcoin futures operate 23 hours daily, from Sunday evening to Friday evening, with a 60-minute daily trading halt. In contrast to this, Bitcoin spot markets trade continuously 24/7. These differing trading hours can lead to price discrepancies, resulting in gaps when the futures market reopens at a different price than its previous close.

Broader market dynamics

On the macro front, the DXY Index—which measures the strength of the U.S. dollar against a basket of major currencies—has seen one of its sharpest one-week declines since 2013. This recent drop is occurring at a faster rate than during President Trump’s first term, a period that coincided with the 2017 Bitcoin bull run. Although a weakening dollar generally benefits risk assets, the DXY still sits at a relatively strong 103.5, remaining above the critical 100 level.

Additionally, the global cryptocurrency market cap is currently around $2.75 trillion, marking a 3.9% decline over the last 24 hours, according to CoinGecko. Bitcoin dominance is 59%, while Ethereum accounts for 8.44% of the total market cap.