$12 Billion Wiped Out! The Shocking Truth Behind Bitcoin Open Interest Decline— Is This the Start of a Bigger Crash?

The crypto market has been experiencing a few bearish weeks, leading to a decline in Bitcoin open interest. Some analysts have remained optimistic and believe such corrections often lead to future growth opportunities, reaching this conclusion with historical patterns. However, economic challenges continue to affect investor confidence, leaving traders and investors uncertain about participating in the market.

Recently the Bitcoin market downturn has affected its various metrics. One of the biggest results of this downtrend was the loss of $12 billion in open interest for Bitcoin. However, an analyst reacted to this drop with a positive outlook and believes this crash will lead to an uptrend. The CryptoQuant analyst, DarkFost, explained that the natural market cycle needs a reset for the Bitcoin price to rise again.

Is This the Bottom? Analysts Weigh in 

Stating “This can be considered as a natural market reset, an essential phase for sustaining a bullish continuation,”. They also mentioned that the historical data backs their analysis of how the market reacts to the Bitcoin market downturn. Explaining “Looking at historical trends, each past deleveraging like this has provided good opportunities for the short to medium term,”. However, these bearish statistics have been caused by global economic challenges, so until these obstacles persist, investors remain cautious. 

Chart 1 – Provided by CoinGlass, published on TradingView, March 18, 2025

Based on Chart 1 Bitcoin’s unsettled derivative contracts like options and futures were at $61.42 billion. The open interest experienced a sharp drop in March and fell to $49.71B, which is a 19% decline. This was caused by US tariffs on goods from various countries, intensifying the fears of a global trade war. This global economic turmoil caused investors to pull out from risky investments, leading to a drop in BTC’s open interest. As of the time of writing the Bitcoin open interest has fallen more reaching $49.02 billion.

How U.S. Policies Triggered a Market Crash

Donald Trump’s tariffs also caused a market crash and price swings which also can decrease options and future contracts. DarkFost the CryptoQuant contributor also mentioned US policies as the main catalyst for the drop. They explain that this crash in the market caused a chain reaction leading to leveraged positions being lost. “Following the recent panic triggered by political instability linked to Trump’s decisions, we witnessed a massive liquidation of leveraged positions on Bitcoin,”  

Unsurprisingly the bearish trend can also be observed in Bitcoin price action as it has fallen sharply too. BTC’s value has been trading near the levels seen before Trump’s reelection in 2024’s November. February 25 was the exact day when this asset’s value went below  $90,000. Moreover, February 27 marks the date when the price crashed further even falling under $80,000. Since then, however, had extreme price swings but as of March 18, it is trading at $83,045.37.

Fed’s Interest Rate Call: A Turning Point for Bitcoin?

Ryan Lee the Bitget chief analyst has also commented on the BTC’s current value and possible feature changes. He mentioned that BTC’s price can swing again based on the March 19 Open Market Committee meeting results. “The market largely expects the Fed to hold rates steady, but any unexpected hawkish signals could put pressure on Bitcoin and other risk assets.”. The CME Group’s tool shows a 99% chance that the Fed’s interest rates will remain unchanged.

What’s Next for Bitcoin Investors?

Increased regulatory pressure or worsening economic concerns could extend BTC price instability. As such, monitoring major financial policies, especially from the Federal Reserve, will help predict Bitcoin’s next major price move. Investors should stay informed and be ready to react quickly to market changes as Bitcoin’s recovery depends on broader financial trends. For instance, Institutional accumulation, policy shifts, and changing risk appetites will influence the future of the crypto market.