In the Eastern Eight Time Zone this week, a key change surrounding Bitcoin is prompting a market repricing: According to statistics from CryptoQuant and A/C source data, Bitcoin derivatives open interest has declined by approximately 30%–31% over the past three months, marking the most significant deleveraging process since the 2022 bear market. Against this backdrop, the legislative review of the U.S. crypto market structure has been postponed again, while the UK has accelerated discussions on protective mechanisms for related payment tools. The stark contrast in the pace of these developments has further elevated the status of crypto assets in the global financial game. Historical experience shows that such a significant drop in open interest often occurs near important bottom ranges, but in the current environment of high regulatory uncertainty, the reliability of this potential bottom signal is being discounted, sparking intense debate among market participants about whether the current deleveraging signifies risk release or a warning signal.
The Real Picture of a 30% Drop in Open Interest Over Three Months
● Capital Flow: According to statistics from CryptoQuant and A/C source data, Bitcoin derivatives open interest has decreased by approximately 30%–31% over the past three months, representing the most evident systemic deleveraging since the 2022 bear market. This decline indicates that a considerable amount of high-leverage capital has exited the market, with positions continuously shrinking from previous highs, and the amplifying effect of derivatives on spot prices has significantly weakened.
● Historical Comparison: Compared to several rounds of severe deleveraging during the 2022 bear market, this adjustment is close to the critical turning point level in terms of absolute decline, falling within the "deep compression" range. Historically, similar levels of open interest decline have often coincided with price phase bottom areas, and this current round of decline is also viewed by some analysts as part of the "historical bottom lineage," but its pace is slower, manifesting as a sustained three-month squeeze rather than a sudden crash in a single day or week.
● Market Structure: From a structural breakdown perspective, this round of deleveraging is reflected not only in the decline of traditional quarterly contracts and monthly futures but also encompasses the high-frequency trading sector dominated by perpetual contracts. The open interest of major exchanges has simultaneously reduced, and there have been no signs of abnormal liquidations or technical events causing localized runs on a single platform. This is more indicative of widespread participants actively reducing leverage amid rising volatility and regulatory uncertainty, rather than a chain reaction triggered by a single point risk event.
Bottom Signal or Retreat Wave: Prices and On-Chain Behind Deleveraging
The 30% drop in open interest this round has allowed for the coexistence of two distinctly different interpretations in the market: "bottom signal" and "retreat wave warning." CryptoQuant's analysis points out that historically, similar levels of open interest decline often occur near important bottom areas. Reviewing past price paths following significant deleveraging, it is often observed that after concentrated releases of forced liquidations and voluntary position reductions, prices first experience a period of tug-of-war and then, depending on the macro and capital environment, initiate a new trend. However, this statistical pattern does not guarantee directional repetition; it merely indicates that leverage risk has been significantly compressed. From a micro-structural perspective, healthy deleveraging is typically accompanied by controllable liquidation scales, capital rates returning from extreme positive or negative values to neutral, and the convergence of spot and futures price spreads from high premiums or deep discounts; whereas panic liquidation is characterized by concentrated liquidations in a short time, drastic reversals in capital rates, and spot discounts or temporary liquidity exhaustion. At the current stage, open interest is being compressed in a slow downward manner over several months, reflecting a more stable withdrawal of capital rather than a sudden stampede. In terms of prices and on-chain metrics, although there has been a noticeable price correction during the deleveraging period, there has not been a unilateral waterfall crash, and the rhythm of on-chain activity and capital inflows and outflows lacks clear signals of consistent improvement, indicating that this round of deleveraging resembles a "tide check" on prior leverage in a high-volatility and uncertain regulatory environment. Whether it has evolved into a true bottom formation still requires observation of subsequent spot buying support and whether the behavior of long-term holders on-chain shifts towards accumulation.
Washington Delays Again: Leverage Clouds Under Legislative Stalemate
In the U.S., the review of the crypto market structure-related bill has been postponed again, meaning that this key legislation aimed at providing a clear compliance framework for exchanges, derivatives platforms, and institutional participants is unlikely to materialize in the short term. Current public information does not provide any reliable timeline, and the timing is clearly assessed as unknown, making it impossible for outsiders to extrapolate specific dates. In such an uncertain environment, domestic platforms in the U.S. and derivatives businesses targeting U.S. users globally must continue to operate in a "gray area." For institutional investors, the delay of the bill directly impacts compliance expectations and capital investment rhythms: some institutions that originally planned to increase allocations may choose to slow down or reassess their participation in high-leverage strategies and complex derivative structures in the absence of clear definitions and regulatory protections; exchanges and derivatives platforms need to weigh risk management and product innovation more cautiously to avoid excessive expansion of leverage tools during the regulatory ambiguity period. From the perspective of ongoing industry and regulatory battles, the inability to finalize rules not only prolongs the market's wait for the direction of "game rules" but also amplifies concerns about future leverage space: on one hand, the market fears that future formal rules will significantly tighten leverage limits, increase margin and compliance costs; on the other hand, some view the current situation as a regulatory vacuum period, choosing to preemptively reduce leverage to prevent passive deleveraging triggered by future rule tightening, thus forming an expectation-driven early "self-restraint."
London Steps Up Protection: Payment Tools Brought to the Regulatory Forefront
In contrast to Washington's delays, London is accelerating its actions. The Deputy Governor of the Bank of England has publicly stated the need to "provide protection for related deposits like safeguarding bank savings," clearly signaling a regulatory focus on viewing these tools as important payment and deposit vehicles within the financial system, rather than merely auxiliary items in investment scenarios. The core idea behind the protective mechanism being developed around this statement is to incorporate holders' relevant positions into a framework similar to bank deposit protection, enhancing their safety and credibility in payment and settlement processes. Once these assets receive a protection level closer to traditional deposits in the eyes of regulators, their role as cross-border payment mediums and financial market settlement assets is expected to rise, thereby promoting the systemic status of crypto assets within the financial system. More broadly, the UK model may serve as a reference for other jurisdictions, especially those pursuing both financial innovation and robust regulation in developed markets and emerging economies. If this regulatory logic of "deposit protection + payment tools" is replicated, a new focus will emerge in the global crypto compliance landscape: on one hand, compliance thresholds and prudent regulatory requirements may increase, potentially raising compliance and capital costs for some institutions; on the other hand, clear protection mechanisms will help attract longer-term, lower-leverage institutional capital, allowing the pricing of leverage and risk to be jointly determined by the market and regulators.
Deleveraging Meets New Regulation: Bitcoin at a Dual Turning Point
The current market environment is at the intersection of deep deleveraging in derivatives and the reshaping of the global regulatory landscape. On one side, the systemic compression of approximately 30% in Bitcoin derivatives open interest over the past three months has reduced the explicit leverage risk in the market; on the other side, the delay in the review of key U.S. legislation has created a regulatory vacuum, contrasting with the UK's proactive advancement of protective mechanisms for related payment tools, simultaneously pressing the accelerator and pause buttons on "risk reduction" and "rule reshaping." Under strong regulatory expectations, institutions often proactively adjust leverage and duration: in the absence of clear rules in the U.S., many adopt lower leverage, shorter durations, or over-the-counter structured hedges to cope with potential policy shocks; in markets with higher regulatory foresight, there may be a tendency to position for medium to long-term allocations through compliant products and regulated platforms. For retail funds primarily engaged in margin trading, slight adjustments in margin requirements and platform risk preferences will compel them to reassess their risk tolerance, with some high-leverage strategies being forced to downgrade or even exit. Within this framework, several short- to medium-term scenarios can be outlined: if regulatory delays continue and rules remain unclear while the deleveraging process in derivatives continues, prices are more likely to oscillate within a wider range, with the market primarily engaging in a wait-and-see approach and existing capital; conversely, if key rules gradually clarify in the near future and align with the ongoing deleveraging process, the release of leverage risk combined with improved regulatory expectations may lay a more stable foundation for a new trend.
Trading Strategy Ideas at the Intersection of Data and Policy
In summary, the approximately 30% decline in Bitcoin derivatives open interest over the past three months places the current level of deleveraging in a notably prominent position within the historical bottom signal lineage, comparable to the leverage compression seen in past important bottom areas. However, the intertwining of the U.S. bill review delay and the UK's regulatory tightening creates a highly uncertain policy environment, discounting the reliability of this "bottom signal," making a single indicator insufficient for directional judgment. From a strategic perspective, a more reasonable approach is to establish a risk monitoring framework centered on leverage-related indicators rather than fixating on price predictions: for example, tracking the ratio of open interest to Bitcoin's total market capitalization to observe whether leverage levels continue to decline or stabilize; focusing on the convergence of capital rates and spot-futures price spreads under extreme sentiment, using these data as the primary basis for adjusting leverage multiples and position density, rather than to extrapolate specific price targets. Additionally, it is important to remind investors to continuously track the progress of the U.S. bill and the dynamics of the implementation of related payment tool protection mechanisms in places like the UK, anchoring position and leverage decisions at the "data and policy resonance point": when deleveraging data indicates that risks have been significantly released, and regulatory signals begin to shift from suppression to clarity or protection, it will be a more opportune time to consider gradually increasing risk exposure; when data and policy signals diverge or even counteract each other, priority should be given to controlling leverage to ensure sufficient safety margins before uncertainty dissipates.
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