Bitcoin traders are counting the costs after a sharp cleanup of borrowed positions. Data from CryptoQuant analyst Darkfost suggests the market just experienced its largest deleveraging phase since 2023, and it did not remove all the risk.
Open interest drops below key average
The signal came from Binance open interest. During the deepest part of the move, open interest fell below its 180-day average. That is rare for Bitcoin futures, and it points to forced selling from both long and short traders.
According to Darkfost, the current cycle was dominated by futures trading. Too many positions were built on borrowed money. When volatility hit, both sides got caught. Long traders who expected higher prices were liquidated, but so were short sellers who bet against a rally.
What matters now is that open interest did not stay low for long. By the time Darkfost posted the analysis, Binance open interest was back to $9.6 billion. The 180-day average sits at $8.3 billion. That means borrowed positions are still heavy, and another similar event remains possible.
Why bitcoin saw so many liquidations
Bitcoin’s price action in 2026 offers some context. The cryptocurrency is down about 8.56% year-to-date, but the path has not been straight. There were strong rallies in mid-January, April, early May, and again in late August.
The recent surge may be the most significant. Bitcoin rose more than 25% in a short period. It briefly moved above $80,000 before pulling back to around $79,931 at press time. More importantly, it broke out of the $60,000 to $66,000 range that held for most of the summer.
That breakout is why traders talk about a possible trend change. Some believe the late August move could signal the end of the bear market. But many also expect one more correction before the next leg higher. The more optimistic calls put bitcoin near $100,000 by the end of the year.
A necessary but risky reset
Darkfost described the deleveraging phase as necessary, even if it was tough on traders. Removing excess debt is not always bad. It can clear the market and create room for healthier moves.
The problem is that borrowed positions tend to return quickly. The recent jump in open interest shows that traders are already adding risk again. That may support higher prices if the rally continues. It also creates the possibility of another sharp unwind if momentum fails.
For now, bitcoin remains in a fragile spot. The breakout above the summer range is encouraging, and the bear market may indeed be ending. But with risk positions rebuilding, traders should probably keep one eye on the next liquidation event.
No one can say for certain what bitcoin will do next. The data from CryptoQuant offers a warning, though. Large deleveraging events have happened before, and they often set the stage for the next move. That move could go either way.
