Bitcoin Derivatives Market Tanks as Open Interest Hits Multi-Month Lows

• Bitcoin open interest fell from 381,000 BTC at the cycle peak to multi-month lows across all exchanges.
• The 21% BTC price rebound came with a 22% OI drop, a sign that shorts closed, not new buyers stepping in.
• Binance, Bybit, and BitMEX all show sustained OI declines, pointing to broad risk-off behavior in crypto.

Bitcoin is struggling to find solid ground. Analysts and traders are sounding the alarm about a major contraction in the derivatives market. The numbers tell a worrying story. 

Open interest, a key measure of active positions in the futures market, has been falling sharply since Bitcoin’s last cycle peak. Several crypto analysts have shared data pointing to a market under serious pressure.

Bitcoin Derivatives Market Has Shrunk Dramatically Since the Peak

Crypto analyst Darkfost shared a detailed breakdown of how far Bitcoin’s derivatives market has fallen. 

According to Darkfost, open interest on Binance hit 94,300 BTC shortly after the November 2021 peak. By October 2025, when Bitcoin marked its most recent market top, that figure had climbed to 120,000 BTC. 

Across all exchanges, open interest stood at 221,000 BTC in April 2024. At the cycle peak, it had ballooned to 381,000 BTC.

The scale of speculation during this cycle was unprecedented. Both retail and professional investors have felt the consequences. Darkfost noted that the derivatives market was “a primary driver during this cycle,” but it has also been a key force behind the decline.

The October Sell-Off Triggered a Wave of Position Closures

The sharpest drop came fast. Between October 6 and October 11 alone, open interest on Binance dropped by 20.8%. 

Bybit and Gate.io saw even steeper declines, both recorded contractions of 37% during that stretch. That sell-off marked the start of a sustained downtrend in derivatives activity.

Since then, the contraction has continued with little relief. Binance is now down another 39.3% from those levels. Bybit has posted a 33% decline. 

BitMEX is down 24%. The data, shared by Darkfost, shows that nearly every month since the October top, open interest has moved lower. The trend is broad-based. It stretches across the entire derivatives landscape.

Traders Are Cutting Risk, or Getting Forced Out

What does falling open interest actually mean? Darkfost put it plainly. 

Investors are “actively reducing exposure, cutting risk, or being forced out through liquidations driven by ongoing volatility.” In other words, the market is not just cooling, it is contracting under pressure.

Trader Ted Pillows added more context on X. He pointed out that Bitcoin is up 21% from the bottom, yet open interest has dropped 22% over the same period. That combination, a rising price alongside falling open interest, is a telling signal. 

Ted described it as “a clear sign of a rally driven by short positions being closed,” with spot demand still absent from the market.

Where Does Bitcoin Go From Here?

The technical picture is murky. Trader Lennaert Snyder laid out his game plan for the week, noting that price action has been “a bit messy” following a bank holiday. He identified the $67,294 level as a weak low, set during low-liquidity conditions. 

A sweep of that level, he said, could offer a high-probability long setup. On the upside, he marked $70,126 as the key level to break for any meaningful bullish continuation, with $72,271 as the next target beyond that.

But the broader backdrop is less encouraging. Darkfost concluded that under current conditions, “it is difficult to envision BTC stabilizing sustainably and reigniting a bullish trend in the short term.” 

With open interest still falling and spot demand lagging, the derivatives market may need to fully reset before any durable recovery takes hold.

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