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Current market dynamics suggest that Bitcoin is undergoing a clear reset through deleveraging, but despite the decline in momentum, Bitcoin has yet to form a final bottom in this downward cycle.
CryptoQuant’s report shows that indicators such as the decline in open interest in futures contracts on the Chicago Mercantile Exchange (CME) platform and the contraction of contract premiums reflect the continued process of leverage reduction.
The CME Group yield curve, which measures the spread between futures prices and spot rates, reflecting demand for leveraged long positions, has been trending downward since 2025, in a pattern similar to that seen before the 2019 and 2022 bear markets.
However, the curve still maintains a positive slope, which means the market has not yet entered a phase of complete capitulation from the previous lows.
The current contraction in premiums indicates a decrease in investors’ willingness to pay higher prices to purchase Bitcoin via futures contracts, reflecting weakening bullish belief and a shift in overall sentiment towards neutral or negative.
Nonetheless, long-term contracts still trade at a higher price compared to spot prices and short-term contracts.
Historically, cyclical bottoms form when the slope of the yield curve turns negative, in a “backward” situation, reflecting severe liquidation pressure and a strong contraction in leverage.
Since this shift has yet to occur, the potential for further declines remains.
Another indicator supporting this assessment is the sharp decline in open interest in CME Bitcoin futures, which is down approximately 47% from the peak in 2025 and 45% during the 2022 bear market.
The decline reflects widespread unwinding of leveraged positions following a period of intense activity characterized by extended liquidations, lower speculative demand and reduced hedging activity.
Overall, with the yield curve remaining positive, the decline in open interest indicates a consolidation environment or a mild decline in the cycle, as although stress indicators are gradually increasing, the sharp capitulation before the final bottom is formed has not yet materialized.
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