In-Depth Analysis: Bitcoin’s Recent Price Stabilization and Market Outlook
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The Aftermath of Bitcoin’s Flash Crash: A Market in Flux
Bitcoin is gradually finding its footing following a dramatic flash crash that briefly plummeted its price to an unexpected $101,000 over the past weekend. This sudden drop led to significant liquidations within the derivatives market, considerably shaking traders’ confidence and leaving market sentiment in turmoil.
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On-chain analytics from CryptoQuant reveal that Bitcoin’s open interest variation plunged to a negative 25, marking its lowest point in 2025. This significant drop underscores a market that has undergone a purge of excessive leverage. However, it raises the question: does this indicate a potential rebound or a precursor to a more profound correction?
Bitcoin Open Interest Dives into Extreme Fear Zone
Data from CryptoQuant, an on-chain analytics platform, indicates that Bitcoin’s open interest variation, a metric that tracks changes in active futures contracts, has dipped into the Extreme Fear zone. Notably, it hit a low around negative 25 points, a record low for 2025.
This level was last observed during Bitcoin’s major correction earlier this year when it also dropped to approximately negative 25. The last instance of open interest falling below this threshold was in mid-2023. The current reading conveys significant market capitulation as over-leveraged traders were forced out when Bitcoin’s price reached $101,000. Historically, such drops have been followed by renewed market strength once selling pressure diminishes.
Each instance of a steep decline in open interest has subsequently witnessed Bitcoin’s price finding support and embarking on a recovery trajectory in the ensuing weeks. This repetitive pattern suggests that extreme deleveraging often sets the stage for the formation of local or macro market bottoms.
Implications for Bitcoin’s Future
A drop in open interest accompanying a price decline typically signifies a wave of long liquidations. This scenario of extremely low open interest suggests that most leverage traders have been cleared out, resulting in a cleaner market landscape. Such a situation can be bullish over the medium to long term.
As illustrated in the accompanying chart, the last occurrence of open interest falling to negative 25 was in early April. At that point, Bitcoin concluded its extended correction from above $106,000, bottoming at $76,300. Subsequently, Bitcoin experienced months of uptrends, eventually surpassing $106,000 and achieving new all-time highs.
If Bitcoin follows a similar recovery pattern, it could potentially experience a 40% to 50% increase over the coming months, propelling its price above $150,000 by early 2026.
At the time of writing, Bitcoin is trading at $106,900, marking a 1.4% increase over the past 24 hours.
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