Bitcoin has entered its sharpest deleveraging phase since 2023, according to CryptoQuant analyst Darkfost, as a considerable reduction in leveraged futures positions has reshaped the derivatives market and helped set the stage for the cryptocurrency’s recent rebound.
The move was particularly visible on Binance, where Bitcoin open interest briefly fell below its 180-day average. It currently stands at approximately $9.6 billion, compared with an average of $8.3 billion over the past 180 days, and represents about 37% of Bitcoin’s total open interest.
The deleveraging followed one of the largest liquidation events in Bitcoin’s history, forcing highly leveraged positions out of the market. Darkfost said traders now appear to be returning, contributing to renewed bullish momentum, but warned that a rapid buildup of leverage could eventually trigger another severe liquidation cycle.
— Darkfost (@Darkfost_Coc) September 7, 2026
Bitcoin experienced its sharpest deleveraging since 2023
After a cycle largely dominated by futures volumes, Bitcoin has just gone through its sharpest deleveraging phase since 2023.
This showed up as a marked decline in Binance's Open Interest, which dropped below its… pic.twitter.com/KtSU6C6nWS
The recent reset came after roughly six weeks of increasingly bearish positioning in Bitcoin perpetual futures. Open interest climbed through July while funding rates turned negative, indicating growing demand for short positions across major exchanges.
That positioning left the market particularly vulnerable to a short squeeze. As Bitcoin moved higher, short positions began to be liquidated, with exchanges closing them through forced purchases. The resulting buying pressure pushed prices higher and triggered additional liquidations, creating a self-reinforcing move.
More than $3 billion in positions were liquidated across major exchanges during the episode, with short positions accounting for the vast majority. Bitcoin and Ethereum shorts represented the largest share of the forced unwinds, while several major altcoins were also affected.
The episode highlights the risks of heavily one-sided derivatives positioning. Although the recent deleveraging has reduced some excess leverage, Binance’s still-elevated open interest suggests that speculative exposure remains significant. Bitcoin was trading at approximately $79,575 at the time of writing, while the broader crypto market capitalization stood at $2.71 trillion.
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