Not the bottom yet? CryptoQuant Data Exposes Bitcoin’s Brutal Deleveraging

The combination of both measures suggests that the current regime is consolidative or mid-cycle bearish, with a final capitulation likely to occur soon.

Current market dynamics indicate that a reset is underway, with Bitcoin undergoing deleveraging. However, the top digital asset has yet to form a bottom for this bear cycle despite cooling market conditions.

According to one report from CryptoQuant, metrics such as falling open interest and Bitcoin base compression on the Chicago Mercantile Exchange (CME) indicate continued deleveraging.

More pain for BTC?

The CME basis compression is a futures yield curve that reflects the demand for long, leveraged exposure. The curve has been trending downward since 2025, following patterns that preceded the 2019 and 2022 bear markets. However, the slope remains positive to this day. While the current slope of the curve suggests that demand for leverage and risk appetite are declining, the market has not yet reached the conditions that have historically accompanied capitulations. It confirms a gradual further debt reduction, but not capitulation.

Yield curve compression currently signals weaker demand for leveraged long exposure as market participants become less willing to pay a premium for bitcoin (BTC) exposure. This indicates a weakening of bullish belief and a more neutral or bearish background. However, longer-term contracts still trade at a premium to spot and short-term futures.

Essentially, the curve reflects an environment in which price increases may encounter resistance until a definitive cyclical bottom is formed. The trough of the past cycle only formed when the slope of the yield curve turned negative, indicating decline and acute deleveraging. This means that BTC faces even more downsides.

Cyclical bottom coming soon

Additional evidence that the Bitcoin market is undergoing a gradual reset in positioning, rather than the acute stress necessary to form a bottom, is the decline in open interest on futures. This measure has fallen sharply from its 2025 peak, following a trend observed during the 2022 bear market.

CryptoQuant found that CME Bitcoin futures open interest has plummeted 47%, similar to the 45% drop in 2022. Such a move reflects a major pullback in leveraged positions after a period of increased participation. This deleveraging is characterized by prolonged liquidation, reduced speculative demand and lower hedging activity, confirming an ongoing cycle of deleveraging.

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The combination of falling open rates and a positive yield curve suggests that the current regime is consolidating or mid-cycle bearish, with a final capitulation likely to occur soon.