Two key derivatives metrics tracked by CryptoQuant suggest Bitcoin's (BTC) current drawdown is mid-cycle deleveraging rather than a capitulation bottom: CME open interest has fallen 47% from its 2025 peak, and the futures basis curve - which measures demand for leveraged long exposure - remains in a downward trend while still in positive territory.
Historically, cycle bottoms have formed only after the basis curve turned negative, indicating backwardation; that threshold has not yet been reached. The data, published in CryptoQuant's weekly report dated Feb. 26, offers a structural read that differs from short-term price recovery narratives.
The 47% drop in CME Bitcoin futures open interest closely mirrors the approximately 45% decline recorded during the 2022 bear market - a period that ultimately bottomed near $15,500 before recovering.
The current unwind reflects a prolonged closure of leveraged positions rather than a sudden liquidation event, suggesting the market is in an extended repositioning phase rather than an acute stress episode.
What the Basis Compression Tells Us
The CME basis - also called the futures yield curve - measures how much longer-dated futures contracts trade above spot and near-term contracts.
When it is compressed but positive, as it is now, it reflects declining but not absent demand for leveraged long exposure. Market participants are less willing to pay a premium for future Bitcoin delivery, but they have not yet priced in outright bearish expectations.
CryptoQuant's framework puts this in the "mid-cycle downturn or stabilization" category - not the acute stress that historically preceded sustained recoveries.
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Historical Baseline and What's Missing
The 2019 and 2022 bear market cycles both followed a similar basis compression pattern before resolving. In both cases, the definitive bottom formed only after the yield curve slope turned negative, an event sometimes described as backwardation.
That condition - where short-dated futures trade above longer-dated ones - has not occurred in the current cycle.
Price rallies in an environment where the basis remains positively sloped but compressed have historically faced resistance, as the structural excess leverage has not been fully cleared.
The Iran escalation Saturday, which pushed Bitcoin briefly toward $63,000, further complicates the near-term picture by adding macro-driven liquidation pressure on top of an already weakening derivatives structure.
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