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Bitcoin’s Recent $12B Open Interest Wipeout: A Necessary Phase, Says Analyst

Recently, Bitcoin experienced a $12 billion open interest (OI) shakeout, and according to crypto analysts, this market correction could be the key catalyst for Bitcoin to regain its upward momentum.

A Natural Market Reset

DarkFost, a contributor to the crypto data platform CryptoQuant, explained in a March 17th report that this wipeout could be viewed as a natural market reset. He stated, "This can be considered as an essential phase for sustaining a bullish continuation." He further emphasized that historical trends show that past deleveraging events like this have provided good opportunities in the short to medium term.

Open Interest Changes

On February 20, Bitcoin’s open interest stood at $61.42 billion, but by March 4, it had dropped by 19% to $49.71 billion. This decline came amid high volatility in Bitcoin’s price, triggered by political instability in the US and uncertainties regarding the Federal Reserve’s interest rate policies.

DarkFost noted, "Following the recent panic triggered by political instability linked to Trump’s decisions, we witnessed a massive liquidation of leveraged positions on Bitcoin." In fact, on February 25, Bitcoin's price fell below $90,000, and just two days later, on February 27, it dropped below $80,000 for the first time since November. Currently, Bitcoin is trading at around $83,400.

Market Outlook

Bitcoin’s open interest is currently sitting at $49.02 billion, representing a 6.5% increase over the past five days. Ryan Lee, Chief Analyst at Bitget, noted, "With Bitcoin hovering in the low $80,000s, its price and open interest could see more volatility if the March 19 Federal Open Market Committee (FOMC) meeting brings any surprises."

Markets are largely expecting the Fed to keep rates steady, with the CME Group’s FedWatch tool showing a 99% chance of no change in rates.

Conclusion

The recent $12 billion open interest wipeout in Bitcoin is seen as a natural part of the market’s adjustment process, which could help pave the way for a continued bullish trend. However, due to the possibility of further volatility driven by monetary policies or political events, investors should remain cautious and keep a close eye on market developments.

(This article does not provide investment advice. Always conduct your own research before making any investment decisions.)


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