Bitcoin Enters Cyclical Adjustment Phase, Staged Deleveraging Signals Clearly Visible

The current Bitcoin market is undergoing a gradual reset process, characterized by systematic deleveraging activity across all futures platforms. Based on data and in-depth analysis from CryptoQuant, this cyclical adjustment phase shows patterns different from the sharp crashes that typically precede total market capitulation. Although downward pressure persists, evidence indicates the market has not yet reached a definitive cycle bottom.

CME Basis Remains Positive: Indicating a Gradual Release, Not Collapse

The CME futures yield curve reflects market sentiment toward leveraged long exposure on Bitcoin. The basis metric—measuring the premium of long-term contracts over the spot price—has compressed significantly since the beginning of this year, following historical patterns seen before bearish phases in 2019 and 2022. However, this downward momentum has not yet entered backwardation territory, where the yield curve turns negative.

It’s important to understand: a still-positive curve slope indicates that demand for long-term leverage is decreasing but has not yet reached outright rejection. Market participants are increasingly reluctant to pay premiums for high-risk Bitcoin exposure, signaling a shift from bullish to neutral or mildly bearish sentiment. Long-term contracts are still trading at a premium over short-term futures and spot, but the spread is narrowing.

The practical implication is straightforward: price increases may face significant resistance until a clearer cycle bottom forms. History shows that cyclical bottoms only occur when the curve enters backwardation, triggering acute deleveraging and massive liquidations. Currently, Bitcoin still has room for further price adjustments.

Open Interest Plummets: Similar Pattern to 2022 Bear Market

Concrete evidence that the market is undergoing a measured cleanup of risky positions—rather than sudden capitulation pressure—is seen in the sharp drop in CME Bitcoin futures open interest. This metric represents the total active open positions in futures contracts that have not yet been closed.

According to CryptoQuant data, CME Bitcoin futures open interest has fallen by 47% from its recent peak, reflecting a significant unwinding by overleveraged speculators. This decline pattern closely resembles the 45% drop during the 2022 bearish phase, indicating consistent market mechanics. The difference lies in the pace: current declines are more gradual, not a single crash wave.

The combination of decreasing open interest and a narrowing but still positive basis curve reveals a cycle of gradual leverage de-risking. Liquidations continue, speculative demand wanes, and hedging activity drops sharply. All these signs confirm the market is in mid-cycle consolidation, not in final capitulation.

Is the Cyclical Bottom Near?

When combining these two main signals—compression of the basis curve remaining positive and declining open interest—the picture that emerges is of a market undergoing a gradual adjustment. This phase resembles a “cyclic reset” rather than a “structural collapse.”

Data suggests that reaching the true cycle bottom still requires more pronounced bearish momentum. Historically, the cycle bottom criteria include a fully negative (backwardated) yield curve, extremely low open interest, and capitulation signals from other chain metrics. Currently, only some of these conditions are met.

The implication is clear: volatility may still continue, and investors should be prepared for scenarios where price adjustments persist before a recovery momentum reemerges. However, the gradual nature of this deleveraging also opens the possibility that the cycle bottom could form within the near term, making this phase a key opportunity in Bitcoin’s market cycle.