Isn’t it still at the bottom? CryptoQuant Data Exposes Bitcoin’s Brutal Deleveraging

Both indicators combined suggest that the current regime is solid or bearish mid-cycle, with a decisive capitulation likely to occur soon.

Current market dynamics indicate that a reset is underway as Bitcoin deleverages. However, despite the cooling market environment, major digital assets have not yet formed the bottom of this bearish cycle.

According to a report from CryptoQuant, indicators such as falling open interest on the Chicago Mercantile Exchange (CME) and Bitcoin’s basis compression indicate that deleveraging is underway.

More pain for BTC?

CME Basis Compression is a forward yield curve that reflects the demand for long leveraged exposure. The curve has been trending downward since 2025, following a pattern that preceded the bear markets of 2019 and 2022. However, the slope remains positive to this day. The current slope of the curve suggests that demand for leverage and risk appetite is cooling, but the market has not yet reached conditions historically associated with capitulation. This confirms gradual deleveraging, but not capitulation.

Currently, the yield curve compression indicates weaker demand for leveraged long exposure as market participants are less willing to pay a premium for Bitcoin (BTC) exposure. This indicates that bullish conviction is weakening and the background is becoming more neutral or bearish. However, long-term contracts still trade at a premium over spot and short-term futures.

Essentially, this curve reflects an environment in which rising prices may face resistance until a definitive cyclical bottom forms. In past cycles, bottoms formed only when the slope of the yield curve turned negative, indicating backwardation and rapid deleveraging. This means that BTC still has some downside room.

A cyclical bottom will appear soon

Further evidence that positioning is being gradually reset, rather than the acute stress needed for the Bitcoin market to form a bottom, is the decline in futures open interest. This indicator has fallen significantly from its 2025 peak, following the trend seen during the 2022 bear market.

CryptoQuant found that open interest in CME Bitcoin futures plummeted by 47%. This is similar to the 45% plunge witnessed in 2022. These moves reflect a significant unwinding of leveraged positions following a period of participation growth. This unwinding is characterized by prolonged liquidations, reduced speculative demand, and reduced hedging activity, confirming that the deleveraging cycle continues.

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The combination of declining open interest and a positive yield curve suggests the current regime is solid or bearish mid-cycle, with a definitive capitulation likely to occur soon.