Bitcoin de-risking accelerates as leverage drops and market cools

Bitcoin is showing signs of stabilization following a steep correction, with analysts pointing to a healthier market structure. Data from CryptoQuant suggests that Bitcoin’s futures market has cooled significantly in recent weeks, setting the stage for a potential recovery.

Specifically, the BTC-USDT leverage ratio, measured via open interest, has been cut in half since its January peak, indicating large-scale deleveraging. The reduction follows a wave of forced liquidations, pushing speculators out and leaving room for a more stable price environment.

$70K remains worst-case as BTC nears correction bottom

Bitcoin’s open interest dropped by 28% — from $71.8 billion on December 18 to $51.8 billion by April 8 — underscoring the extent of market reset. While this shift might trigger short-term volatility, it creates a long-term foundation that’s more resilient to wild swings, giving confidence to seasoned investors.

Sina, co-founder of 21st Capital, reinforced this sentiment in an April 9 post on X. He said Bitcoin is now “significantly de-risked,” and his Quantile Model suggests the current drawdown has covered 75% to 80% of its likely depth.

BTC fell from its record high of $109,000 to a recent low near $74,500 — a 31% drop. Historically, corrections of this nature bottom out near 34%, placing the $70,000 zone as a potential floor unless macroeconomic conditions worsen.

According to Sina, “If we avoid a recession, $70K is the worst-case scenario. Even if there’s more downside risk, BTC remains undervalued for long-term positions.”

Sideways action expected in BTC’s “volatility corridor”

Despite the increasing optimism among long-term holders, a fast recovery may not be in sight. Bitcoin analyst Axel Adler Jr. expects BTC to move within a defined range, known as the “volatility corridor,” before any breakout can occur.

This corridor stretches from $75,000 to $96,000, marked by realized prices of short-term holders across different intervals. Adler believes BTC is likely to trade sideways between these levels for several weeks.

Still, he warns that a break below the 365-day simple moving average could open the door to further declines — even pushing prices below $74,500. If that happens, the $70K zone would again become a crucial support target, aligning with Sina’s projected low.

Market still in reset mode but outlook improves

The recent drop in leveraged trading and cooling of speculative interest are seen as positive steps toward a more sustainable Bitcoin market. The 28% fall in open interest and more cautious futures activity suggest investors are repositioning for long-term strategies rather than short-term hype.

Although near-term recovery may remain elusive, especially given macroeconomic uncertainties, BTC’s fundamental health appears to be improving. Reduced leverage, clearly defined support levels, and steady accumulation by patient investors could set the tone for the next major move.

Until then, Bitcoin is likely to remain within a broad consolidation range — but with a much more solid footing than just a few weeks ago.